Special Bulletin: August 27, 2025

Cotton Candy, Anyone?

I remember growing up in Illinois and going to the “Heart of Illinois” fair each summer.  The taste of fresh squeezed lemonade and the smell of corn dogs are forever imprinted in my memory. Then there was the cotton candy! Delectable to the eyes and taste buds and addictive for all of us kids. The truth was that while the cotton candy was enticing, it was as thin as air and always left me wanting more. (It also gave me a stomach ache, especially when mixed with corn dogs and “elephant ears!”) I used to think that the fair came to town for my good. But later, I came to realize the fair was meant to distract all of us kids and to coax our dollars out of our pockets – to improve the “carnies” economy. 

Last week the Fed used the photo opp in Jackson Hole to excite investors with a tease of a possible September rate cut. That decision is still very much data dependent and there are several key data points yet to be released between now and then. 

Risks still exist. They always do. But I wonder if the risk to the Chairman’s legacy may have just helped offset certain risks to the stock market? 

Risk management is still paramount.

Our Current Market Outlook was upgraded to “Market in an Uptrend” with a green light as of the close on Monday, August 25th with the SPX closing at 6,439.32. Our Core Four currently sports 2 green and 2 yellow lights with a VIX that is under (yet basing?) its key 50-day mav.

The rally in the stock market is still very much intact. Friday’s potentially dovish Powell comments sent positive shock waves through the financial and small cap stocks and has confirmed an institutional rotation is underway rather than a full scale reduction in equity exposure. The stock market’s future direction seems less dependent on tariff decisions now, but is heading into the “dreaded” September & October historically volatile period. Stay alert for a sharp downward move through the 21-day mav’s to set up a test of the 50-day mav’s of the major indexes.

Having said that, in our late July post we stated, “remember the long-term trend is still up as long as the 21-day (and more importantly, the 50-day) moving averages are comfortably below and supporting the major indexes price advance.” That tactical message still applies.

Several themes are emerging, some direct beneficiaries of the new Administration’s policies, and they will likely persist for 18 months or longer. Others may fizzle out. New themes will develop. Currently, the nuclear, aerospace and defense, financials, small and mid sized companies and artificial intelligence, just to name a few, are working. The great Wayne Gretzky once said that his success was due to skating to where the puck would go, and the same can be said for successful investors. But you have to be in the game and keeping your head up and your eyes open to see the play develop in front of you.

“I will lift up my eyes to the mountains;
From where shall my help come?
My help comes from the LORD,
Who made heaven and earth.
He will not allow your foot to slip;
He who keeps you will not slumber.
Behold, He who keeps Israel
Will neither slumber nor sleep.
The LORD is your keeper;
The LORD is your shade on your right hand.
The sun will not smite you by day,
Nor the moon by night.
The LORD will protect you from all evil;
He will keep your soul.
The LORD will guard your going out and your coming in
From this time forth and forever.“

Psalm 121 NASB 1995

Game plan: Stay on the alert for a test of the 21-day mav’s on the main stock market indexes but stay optimistic- the trend is your friend! Continue deploying capital in the areas that are being accumulated by the institutions. Keep an eye on the data the Fed deems important- especially the PCE on this Friday. Pray for discernment from the Lord Jesus regarding stewarding His wealth. Pray for the peace of Jerusalem (Psalm 122:6-7). May they prosper who love her.

Note: You can learn more about The Triumphant Core Four risk management system by clicking here.

Have a Triumphant day! ®