 Good morning and welcome back to Trader's Edge. So Traders this week will have to weigh up data on how the U.S. Economy fared in the third quarter along with key readings of consumer inflation data and spending amongst with other stuff That might move market and cause more choppiness. Joining me now to help break all this down is Professional trader all the way from Canada and the founder of Caruso Insights, Matt Caruso. Matt, good to have you on Thanks. Thanks so much for having me, Ricardo All right, so Matt despite the fair stability that we saw in the market this week We are likely to see increased volatility. We already saw some movements after the US GDP data today We have in our calendar PCE data ISMPMI and a public speech by the Fed share Powell on Friday We want to start with the core PCE so traders are obviously keeping a very close eye to that announcement They they expect that whether that will confirm inflation in the words largest economy is slowing That's important for whether the Fed will maintain rates or even cut rates starting the new year What's your overall take and do you agree with the general consensus that they can actually be done with rate hikes and they could start cutting by next year? Absolutely, I think that's exactly where we're headed if you take a look at the more real-time readings of the core PCE which housing is a very large component if you look at the real-time readings There's a much more significant slowdown that's already being you know baked into the PCE reading So I see that continuing to slow in the coming months. I think if anything will have downside surprises So I think that's going to provide a firm bid under equities and and really continue the dramatic rotations We've seen since the last FOMC meeting Fantastic and obviously we've seen from today's US GDP data that we have seen rallies in the indices more specifically want to start With the NASDAQ that's been slightly underpinned by the fact that treasuries have started to fall the dollars continuing to weakening There has been some positive consensus from the market that like you said We are going to be into a positive set where the Fed continues to either maintain or even cut rates in the new year But I want to start with that so it seems to be crossed or have crossed the critical level of 16,100 at the moment. Is there what do you see technically? Is there a potential for it to move up to new highs potentially in the next week or so? You know a lot of important critical movements happening PC tomorrow obviously being one of them in a short term but also with the Fed announcement and the Inflate well, sorry CPI data again going on and the unemployment data What do you see? Yeah, so what I see actually is internally there's been a lot of bullish rotations going on in the market So unlike a lot of earlier times this year, although a lot of stocks beginning 2023 kind of came off of their bear market lows Once that took place It was a lot of the kind of sustained very mega cap stocks that led the rally for the first time since the FOMC bottom you're seeing a really dramatic change internally what's going on with the market so although the Nasdaq has kind of Been little changed for the past week or so internally. You're seeing bonds continue to be bid overall You're seeing a lot of money flow into longer duration assets into high growth into things like biotech Golds looking to break over 2,000 more sustainably So I think if we continue to see data trends continue especially with PCE tomorrow I think this is only going to add even more fuel to this rally that this is really a new rally taking place under the surface It may seem like it's a continuation of what we saw with the Nasdaq earlier in the year But the the components driving this rally are vastly different You can see how throughout all of June July August right into the main bottoms for bonds I mean they were sold heavily despite the Nasdaq being higher So seeing bonds lead off of their bear market lows That's completely changed the dynamics of what's been leading within the market So I see continued strength, but I think there's gonna be a rotation on when and who leads this market And so you're gonna want to be focusing on long-duration assets that whether that that's bonds Things like gold and even within the market. You want to focus on stocks that are long-duration higher growth and stocks of that nature Absolutely mentioned gold. It's very interesting, right? They had has crossed the 2,000 mark It's not even overcome critical resistance levels But what case or when do you build the case for a sustained rally for gold? And what are you looking for in terms of the short term if you're looking at us at a day trader? What what does he look for? So I think the key absolute key thing that drives gold are real real interest rates And so I know this selling chair Powell has been speaking about quite a bit say that he thinks that you know A real rates are at 2% so we have interest rates above the inflation rate Even if we don't if it doesn't hike any further if we stay where we are so even in a more kind of hawkish stance If you don't factor in a rate cuts on the near the short end by seeing kind of the long end of bonds starting to ease That's gonna lower the real rates and that's really gonna Put a bid under gold. So I think we're at the beginning of a breakout I think we've reached the top of the cycle for real rates, which is the main driver for gold So seeing that starting to reverse I think you're at the very beginning of what could be a gold move that's finally sustainable above 2000 When we first hit 2000 back in 2011 So this has been a really important line of the sand now if you can drill down even into equities Gold equities and even silver stocks have been very stubborn. They've been kind of suffering the brunt of inflation in terms of operation costs So seeing now that gold starting to get over 2000 seeing that some of those stocks are now coming into into play Are starting to kind of build strength and show strength That's typical of the beginning of a more sustainable rally Typically, you'll see gold miners confirm strength and gold and for the first time in a long time We're starting to see that again. So for myself even in the short term I'm I'm long gold equities and be looking to add on any weakness down to even short-term key averages For example an eight exponential average or a 10-day average is where I'm looking to add to my gold equity holdings Got it. It's quickly about treasuries. You've spoken a lot about that one I don't think it's gonna go back to five percent. We expect to see more weakness weaker dollar What are you looking for specifically right now with treasuries to your tenure? I? Think we put in the peak of the cycle So I think we're gonna be seeing if you're talking a treasury yields You're gonna see a trend of lower highs lower lows if you're looking at bond, you know Treasury prices we're gonna see a series of higher highs and higher lows I think it's it's interesting if you take a look at a longer-term chart of the TLT Which is kind of a mix of a longer-term treasury bonds I think there's clear signs that we had a climax bottom that was put in in late 2023 similar to how we had a climax top in bonds During the COVID pandemic so you can you can almost really if you look at the volume cues You can really like visually see the two cold posts of where we had our top and where we I think we put our bottom in So, you know any any uptrend that the old maxims always remain true if the trends up you buy the dips if this the trends down You sell the rally so this is a buy the dips type of market if we really put that bottom in Got it. You talked a lot about stocks We had a lot of conversations around the magnificent seven They were the ones that held up the rally for a very long time the AI rally as well that we saw in Vidya and other stocks You see now small cap stocks like you said at beginning joining into that conversation into that narrative What are you looking at what stocks seem to be interesting in your portfolio these days? So this is what where I get most excited when especially going past the mag 7 It's always nice to make a profit, but it's nice when you see More of a plethora of stocks to choose from so there's I think there's many ways you can attack this If you're looking there's some recent IPOs, which are more dynamic. They tend to be smaller cap There's kind of a breadth of an offering that there's also mid cap growth Which has I think been held down by worries about a weak economy which are coming back to life so if you want to look more at the Small-cap arena you can look at stocks like shark ninja SN Which is a recent spin-off which has been that basing sideways and starting to break higher. It's retesting its base breakout So that's showing a lot of strength. There are also some other small caps such as Freshworks FRSH, which is putting a very nice basing pattern in you see a lot of this strength come up the right side of these bases as The softening of bond of bond yields are starting to work throughout the system giving a bid to these recent IPOs I think if you look even past small caps and you look at kind of more like mid cap Or small large cap growth There's an incredible amount of strength taking place in that in that group You can look at cyber security stocks stocks like crowd strike, which had great earnings and gapped up Also, there's palo Alto networks, which reported last week, which was an initial Downside reaction, which has now come back very strongly breaking to all-time highs I mean there's very few stocks sitting at all-time highs and palo Alto is one of those stocks There's some other great stocks. I think great stores like Shopify There was some great black friday spend. We had records for black friday spend Shopify is a great. I think example of a possible turnaround play And they'll be benefiting from obviously lowering falling interest rates But also they spun off a lot of the capital intensive Businesses they were trying to focus on they're trying to compete head to head with amazon in terms of distribution in terms of Delivery network. They've spun that off. They've made friends with amazon and I think if they focus on their core business of e-commerce You're seeing records there. So I think that's an underappreciated growth story Because of some turmoil it had last year. I think they're they're back strongly on the growth path Got it. I don't know if you heard that as well matter You've even seen this in your charts, but people are saying game stop Very much ripe for a potential breakout expecting a 30 percent increase from now until the year end. Is this something that you see? Well, so game stop I try and avoid the stocks that are kind of just purely momentum based I think game stop is something that can squeeze which is the whole reason why it squeezed the first time But this is something that there I think there's so many people holding it from the last cycle who will remain under pressure This is something you want to sell into. I mean not that it can't go higher Not that it can't squeeze even to a 200 day average, which would be a fair fair return But it's a very High risk high volatility type of play. I think there's far more sustainable better opportunities than game stop out there Got it. Speaking of high volatility again, we expect a lot of choppiness over the next couple of weeks But more specifically tomorrow and the day after tomorrow given the big major economic events You as a trader are the traders listening to you. How are you approaching? That's what's your strategy? I really see this market. We're in a I think a unique situation if you look at the data the breath data of how powerful this move has started Since they put in its bottom We have the potential of being at the beginning of a true bull market upleg now You know, there's always kind of different permutations of how they can come out and and one is you want to be buying those dips Sometimes the dips don't come you have what they call a lockout rally where you just stay persistently strong There's just been too much money on the sidelines. There's been too much bearish sentiment for too long So I'm really positioned to kind of approach this market from both ways I'm I'm continuing to increase exposure slowly on the long side as stocks advance with low risk entries But I also have some cash in reserve in case we do get that kind of dip lower So in terms of stocks, I'm looking for kind of some softness Stocks like Shopify, which have been like I said fairly vertical coming off of earnings with this good market Any kind of an easing down to even a 21 exponential moving average I think would be a great opportunity if there's any kind of softness after what's been a fairly straight move up But equally there are some I think very powerful stocks like arm holdings, which it was a recent IPO Which just came out and it's it's basing you can see this has gone pretty vertical since it broke out of its base It's starting to consolidate sideways somewhat I think any kind of break higher if let's say pc comes in lower than expected in this market gets a continued bid These small sideways consolidations provide really good short-term entries in what I think is an a beginning and accelerating trends Matt, this has been an absolute pleasure. Thank you for joining us today. Is there anything else you'd like to say before we close off? No, I think just focusing on on the internal rotations that there's really something unique that's taking place It's it's far more dynamic than any of the rows we had earlier in the year So it's not only positioning long you can see for example QQQ has been fairly flat for the past week or so, but there's been a lot of strength internally So focusing on both market trend, but also the very strong internal rotations Getting yourself positioned in the right stocks is going to be critical to maximize any kind of returns in this trend Fantastic Matt. Thank you for joining us. It was a pleasure my man. Thank you. Thank you