Bad jobs numbers… a net jobs loss in June… “bad news is bad news” … but bad news is good for gold… Eric Fry names a potential 10X winner… how to spot them yourself
This morning’s U.S. nonfarm payroll report delivered a sobering surprise…
Only 22,000 jobs were added in August – miles below the 75,000 that economists had expected (already an underwhelming number).
Meanwhile, the unemployment rate rose to 4.3%, its highest level since late 2021.
But the real surprise was the revision of the June data. After the number was adjusted lower by 27,000 jobs, it revealed a net loss of 13,000 – the first contraction since the pandemic.
Directly after the opening bell, Wall Street tried to put a positive spin on the data – the old “bad news is good news” routine. Stocks opened higher as investors leaned into the idea that the weak data virtually guarantees a September rate cut.
But that optimism faded as traders focused less on the coming rate cut and more on what the jobs data revealed about the broader economy…
Weak job creation, rising unemployment, and downward revisions all point to an economy slowing more sharply than expected (while inflation has been climbing) – that’s not a backdrop for healthy earnings or sustained stock gains.
Translation: “Bad news is bad news.”
This is why the chatter about a 50-basis-point cut in September ramped up this morning, just as we predicted.
In last Friday’s Digest, I wrote “If we see weaker-than-expected data [in Friday’s jobs report], a September rate cut is a lock, and speculation about 50 basis points of cut will fill headlines.”
Right on cue, here’s CNBC from this morning:
Traders put a half-point cut in play for mid-month following the payrolls data with traders now seeing about a [14%] chance of that happening, according to the CME Group’s FedWatch tool…
That’s up from a zero chance of a super-sized cut the day before.
Futures data shows traders believe it’s certain the Fed will cut rates a quarter point from their current 4.25% to 4.50% range at its next policy meeting on Sept. 17.
As I wrote in yesterday’s Digest, a 50-basis-point cut would be unwise. It would send the wrong signal – less “confidence” and more “fear.” But we’ll see.
Now, though stocks are falling, there is one asset that’s surging this morning on the disappointing news…
Recent poor economic data has helped gold break into new territory
We’ve been waiting for gold to push through overhead resistance – and it’s finally happened. As I write, gold is up about 1% today.
To recap, let’s rewind to our July 29 Digest:
Since peaking in late April at $3,432, gold has been trading sideways, unable to break through resistance at the general $3,430 level.
But notice what’s happening…
Gold is setting up a bullish “ascending triangle” technical formation.
This is a popular pattern used in technical analysis to identify potential breakout opportunities. It’s bullish, suggesting that an existing uptrend will likely continue after the pattern completes…
To trade this pattern, wait for gold to break definitively above the upper resistance line around $3,430.
Fast forward to Friday, August 8, when gold futures hit a new high above $3,500 when President Donald Trump discussed tariffing gold bars.
Here’s how that looked.
But we weren’t convinced this was an official breakout to buy.
Our skepticism was borne from Luke Lango’s trading system in Breakout Trader. Here’s Luke explaining:
A common mistake traders make is overlooking the importance of volume, leading them to buy into a trade that appears to be breaking out on weak volume, only to see it fizzle and reverse…
For a [true] breakout, bullish price action is a requirement, but it alone is not sufficient. That rising price needs the support of outsized volume.
Though gold futures briefly popped on heavier-than-usual volume, we suggested waiting, writing:
We want a significant and sustained increase in bullish trading volume.
Well, that sustained bullish trading volume never materialized. And over the ensuing sessions, gold dropped – until last week, when the yellow metal made a new run at resistance and broke it convincingly.
Below is how that looked. Note the spike in volume corresponding with Tuesday’s 2% pop (in green). And don’t miss how volume eased yesterday as traders took profits.
This is what we want to see – heavier buying volume on “up” days, and reduced selling volume on “down” days.
Now, here again, we want to see outsized and sustained bullish trading volume, but we’re off to a good start.
As you’d expect, top-tier gold miners have jumped alongside gold over the last week
One example is Westgold Resources (WGXRF).
It’s an Australian gold mining, exploration, and development company that our macro investing expert Eric Fry recommended to his Speculator subscribers back in 2020. They’re currently sitting on open gains of 703% as I write Friday.
Below we look at WGXRF, which is up 45% over the last month, while gold has climbed just 5% during the same period.
Tying back to our trade trigger of volume, notice this summer’s relatively low volume on “down” and “sideways” days and the heavier volume on “up” days.
We expect gold to continue to climb – especially in the wake of today’s disappointing jobs numbers (and our government’s inability to keep its spending in check).
And, of course, it should provide a good portfolio hedge if today’s stock market turns lower. But don’t overlook top-tier miners. If gold does well, they’ll do even better.
Here’s Eric’s take:
Most investors ignore gold stocks completely.
But these overlooked and underappreciated stocks are capable of delivering great results, especially when most other investments are not.
While Westgold’s 703% return approaches the 1,000% milestone, Eric just gave away the name of another 1,000%-return stock candidate
It’s a bonus pick he just released in the run-up to next Wednesday’s 10X Breakthrough event at 10:00 a.m. Eastern. In tomorrow’s Digest, co-Digest-writer Luis Hernandez will reveal it to you.
But today, let’s briefly cover how Eric finds these 10X winners. After all, while most investors have never caught even one “10X winner” in their lifetime, Eric has found 41 of them.
For decades, Eric accomplished this by relying on a macro-first approach – identifying big-picture trends and then drilling down to find the individual companies poised to benefit. That process worked extraordinarily well.
But over the past five years, Eric has gone a step further. With the help of InvestorPlace’s quantitative research team, he has conducted more than 5.2 million data backtests to identify what all his biggest winners had in common.
The result is his first-ever stock-picking algorithm – a system he calls Apogee. It distills decades of experience into a set of simple but precise rules.
One of those rules is what Eric calls the “down a lot, up a little” pattern. It describes situations where a high-quality stock suffers a steep but temporary selloff, then begins to recover.
(For you Buffett fans, this has shades of his classic quote, “A great investment opportunity occurs when a marvelous business encounters a one-time, huge, but solvable problem.”)
In the right circumstances – when paired with other “10X Factors” – this setup can be the launchpad for major long-term gains.
It’s important to point out that with this system, you’re not gambling on, say, tiny biotech stocks that have never turned a profit. Many of the stocks that Apogee identified in its backtests are household names.
Back to Eric:
According to the backtests my team put together, Apogee would have picked out Nvidia Corp.’s (NVDA) 1,871% run… Apple Inc.’s (AAPL) 4,285% surge… and others like them.
And it mirrors perfectly the type of stocks that I often favor. These are established firms trading on the Nasdaq and NYSE exchanges… not exotic bets on three-person startups…
The stocks my system and I work together to recommend are the type of investments where even a single winner can reasonably turn a $2 million nest egg into $4 million…
Eric believes opportunities like this are still out there today – and that Apogee can help identify them with greater accuracy and speed than ever before.
At his live event next Wednesday at 10 a.m. Eastern, Eric will walk through the five “10X Factors” that define these rare winners
Even better, he’ll reveal five official stock recommendations from Apogee including a company he’s calling “Nvidia on Steroids.”
And again – be sure to check out tomorrow’s Digest from Luis, where he’ll give away one of Eric’s picks.
I’ll give Eric our final word:
I’m unveiling my system for the first time ever at my 10X Breakthrough broadcast on September 10, at 10 a.m. ET.
I’ll show how I use five 10X Factors to spot potential big long-term winners in advance. And how the system and I work together – man + machine – to make my final stock picks.
Finally, I’ll reveal the system’s first five “official” recommendations… including their names, ticker symbols, and “10X Dates” – exactly when they flashed “Buy” in my new system.
Reserve your spot for that September 10 free event now – and I’ll see you there.
Have a good evening,
Jeff Remsburg
