The Fed Gives the GREEN Light

The Fed just gave stocks the “green light.”

On Wednesday, the Federal Reserve spoke to investors.

It shared minutes from its recent meeting, and it announced that it’s going to hold interest rates steady for the third time in a row.

Not only that, the central bank signaled that it could cut interest rates three times next year.

Needless to say, this is a HUGE deal.

You see, the economy and stock market both love cheap money. That’s why stocks fell last year when interest rates were climbing. 

Now, the Fed is signaling that it could start cutting rates again.

As you’d expect, stocks stormed higher on the news.

The S&P 500 closed the week up nearly 2%, while the Nasdaq rallied 3.4%. 

Apple (AAPL) - the world’s largest stock - played a big part in this. It ended 1% and it had its highest weekly close ever. 

It’s hard to be bearish technically, when the world’s most important stock is doing this well. But, once again, it wasn’t just the mega caps that performed well. Many stocks spiked on the news.

Last week, ten of the eleven major sectors closed higher. Real estate and industrials - the top performing sectors - gained an impressive 10.5% and 7.7%, respectively.

These are big gains. But they pale in comparison to what beaten-down growth stocks delivered. 

Last week, Rocket Companies (RKT) surged 31%... Upstart (UPST) spiked 20%... And Carvana (CVNA) gained 28%!

This is a big deal. Not that long ago, these stocks were the laughing stock of the entire market.

Rocket plummeted 86% from its all-time highs, while Upstart and Carvana both plunged more than 97%

So, it’s encouraging to see these beaten names rallying again. It confirms that risk appetite is back in a big way.

Today, we’ll explain why we think the stock market could get even crazier soon. 

But we want to first welcome you to The Discount Weekly. Each week, we examine the biggest issues facing traders and investors… and explain what they mean for your wealth.

Today’s issue is all about the raging stock market. Specifically, we’re going to show you how to make the most of this environment. 

Let’s jump in… 

The Worst Stocks Are Now The Top Performers

It’s no secret that mega cap tech stocks have done well this year. 

For much of the year, all you had to do was buy The Magnificent 7 stocks like Apple, Microsoft (MSFT), and Nvidia (NVDA). 

But that’s no longer the case. These days, the best performing stocks are growth stocks that got beaten to a pulp last year. 

Last week, the ARK Innovation ETF (ARKK) gained 3.9%. It’s now soared 64% higher in 2023. It has far outpaced the Nasdaq, which is up 52% this year.

We think this trend continues. To understand why, let’s pull up a weekly chart of ARKK.

We can see that ARKK hasn’t even gotten going yet, unlike QQQ. It’s just starting to climb out of a bottoming pattern that it’s been building out for over a year. 

That said, it appears “accumulation mode” is coming to an end. We say this because just last week ARKK had its highest weekly close since August 2022.

If this breakout continues, ARKK should see much, much higher prices in 2024. But that’s not the only reason we’re bullish on ARKK....

When we look inside ARKK, we see that many of its top holdings are setting up for big moves.

Consider Coinbase (COIN) - ARKK’s largest holding. This year, COIN has been on fire. It has rallied 318% in 2023,  thanks to a strong rebound in the cryptocurrency market. 

That’s a spectacular move. But we see even higher prices for COIN. Based on its chart, we wouldn’t be surprised to see COIN reach $200 within the next 3 to 6 months. 

Tesla (TSLA) is another name to keep a close eye on. TSLA is the fourth largest holding in ARKK. 

And like COIN, it looks primed for a major rally.

Several major ARKK holdings also look poised for explosive moves. But we don’t want to bore you with a bunch of repetitive charts.

What’s important to takeaway from this is that growth stocks are setting up for a monster 2024. 

And we’ve taking full advantage of this opportunity at The Discount if you’ve been following us.  

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