Today’s update will cover:

• Inflation pressures are on the rise.

• Broad commodities ETF staging another breakout.

• The Fed’s “green light” to start hiking interest rates.

• My favorite…

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Now for this week’s issue…

An August payrolls report that smashed expectations is adding additional pressure to the Federal Reserve to hike interest rates at its next meeting.

Nonfarm payrolls added 162,000 jobs last month which was triple the 53,000 expected and brings the three-month average to 71,000 (chart below). The prior two months were also revised higher by a combined 55,000. Along with a low level of weekly jobless claims, data suggests the labor market is strong.

Evidence of a decent labor market could pressure recent comments from Fed Governor Christopher Waller, who favors keeping rates steady in September assuming no big surprises across inflation reports this week.

But various measures of consumer inflation have run above the Fed’s 2% target for over five years. That means the Fed’s dual mandate of full employment along with price stability support rate hikes in the months ahead.

The bond market agrees, with the 2-year Treasury yield currently sitting 62 basis points above the current upper fed funds target. The 2-year yield tends to lead changes in the fed funds rate and is implying the bond market expects at least two rate hikes ahead.

While investors are on edge over the potential for a renewed hiking cycle, a slow pace of rate increases shouldn’t derail the bull market. Part of the pressure on rates is a strong economy, which should also be a tailwind for the earnings picture.

The stock market should be able to handle measured increases in the fed funds rate, provided that inflationary pressures don’t push the Fed into a quick pace of hikes like back in 2022.

This week, let’s look at market-based evidence that Fed rate hikes could be around the corner, and the latest chart breakout signaling higher inflation in the months ahead. We’ll also look at why volatility is running much higher than the VIX would suggest and why price swings could pick up soon.

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The Chart Report

Following a strong payrolls report, investor attention will turn toward consumer and producer inflation data due to be released this week. Expectations for a Fed rate hike at their upcoming September meeting is bouncing all over, with odds pushed higher by a hawkish tone from Fed Chair Kevin Warsh at Jackson Hole and tempered by dovish talk from Waller last week. Current odds implied by fed funds futures shows a 60% chance of a rate hike at the next meeting. The bond market also agrees on tighter policy. The 2-year Treasury yield tends to lead changes in the fed funds rate and currently sits 62 basis points above the upper end of the target range (chart below).

A fresh break out in commodities could add further upside to inflation in the months ahead. Everything from energy to metals and agricultural products are rising on supply and demand imbalances. The flow of tanker traffic through the Strait of Hormuz remains limited which is impacting oil and supplies used for farm fertilizers. Wheat supplies are taking a hit as Russia and Ukraine target attacks on grain terminals, where both countries comprise a quarter of the world’s wheat exports. And data center construction is boosting demand for copper. The iShares S&P GSCI Commodity-Indexed Trust ETF (GSG) that tracks a broad basket of commodities is breaking out from continuation triangle which follows a move out of a massive basing structure earlier this year.

While broader market volatility dries up, there are large divergences happening under the market’s hood. The CBOE Volatility Index (VIX) touched its lowest level of the year last week and has closed between the 14-17 point range for 25 consecutive trading days. That’s the longest streak since 1992. But return dispersion within the S&P 500 has been running much higher. Weekly return differentials have been running at elevated levels while the 3-month implied correlation for stocks within the S&P are running at record low levels (chart below). While the price action on the surface of the index appears calm, there are outsized moves happening under the hood.

While broader stock market volatility is running at low levels, a couple catalysts could result in larger price swings ahead. The first is with calendar seasonality, with September ranking as the worst month of the year based on both average returns and win rate using data going back to 1950. It’s also worth noting that poor seasonals in September are concentrated in the last two weeks of the month. At the same time, a negative breadth divergence is forming on the NYSE. The chart below shows the cumulative advance/decline line for securities listed on the NYSE, and is a way to track the average stock. The A/D line peaked in mid-August and is turning lower even as the S&P 500 moves sideways and remains near the high.

Trade Idea

Lumentum Holdings (LITE)

The stock topped just above $1,000 in May and is forming a new basing pattern. Recently completed a smaller pullback following a test of resistance that reset the MACD at the zero line. I’m watching for a move over $1,000.

Heard in the Hub

The Traders Hub features live trade alerts, market update videos, and other educational content for members.

Here’s a quick recap of recent alerts, market updates, and educational posts:

• The setup you need to watch in mining stocks.

• How to tell when rising rates will spillover to equities.

• Global sovereign yields highest since the financial crisis.

• Increasing money supply boosting gold’s appeal (and price target).

• Sectors showing the best relative strength as the S&P 500 consolidates.

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Disclaimer: these are not recommendations and just my thoughts and opinions…do your own due diligence! I may hold a position in the securities mentioned in this report.

These ideas are the end result of my process to identify stocks offering the right combination of growth fundamentals along with a proper chart setup. Live alerts are sent to Traders Hub members only.

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Stock Market Update

An August payrolls report that smashed expectations is adding additional uncertainty over the Federal Reserve’s next move on interest rates. Nonfarm payrolls added 162,000 jobs last month which was triple the 53,000 expected. The prior two months were also revised higher by a combined 55,000. The report came a day after influential Fed Governor Christopher Waller favored keeping rates steady in September assuming no big surprises in next week’s inflation reports. But evidence of a strong job market coupled with inflation that’s ran above the Fed’s 2% target for over five years will put pressure on the Fed to act. The 2-year Treasury yield that tends to lead changes in the fed funds rate now sits 62 basis points above the current upper fed funds target, implying the bond market expects at least two rate hikes ahead (chart below).

Major stock indexes pulled back slightly after the jobs report, with stocks recently rallying on hopes of the Fed holding rates steady versus pulling back when odds for a hike increase. While the knee-jerk reaction is centered around the rate outlook, it’s worth keeping in mind that good news for the economy should be good news for corporate earnings. The jobs report adds to recent data pointing to an economy expanding at solid pace, which should support the bull market looking ahead. Over the near-term, stocks are just starting the worst month of the year for calendar seasonality while volatility should be no surprise heading into midterm elections. It’s worth noting that we’re seeing a deterioration in breadth, with the cumulative NYSE advance/decline line pulling back in the chart below.

While the average stock is pulling back, it’s interesting to note that the market’s biggest stocks including the Mag 7 could be setting up to take the lead again. I’ll have more on that in our chart breakdown for trade ideas below.

Keep reading to see:

• Open ETF positions.

• Open stock positions.

• Chart analysis for new trade ideas.

Read more

Today’s update will cover:

• The setup you need to watch in mining stocks.

• How to tell when rising rates will spillover to equities.

• Global sovereign yields highest since the financ…

Read more

These ideas are the end result of my process to identify stocks offering the right combination of growth fundamentals along with a proper chart setup. Live alerts are sent to Traders Hub members only.

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Stock Market Update

Although new Federal Reserve Chair Kevin Warsh promised to change how the Fed communicates with the capital markets, his first keynote speech at the Jackson Hole Symposium contained few surprises. Warsh sounded hawkish in describing inflation as running above target and reiterated the Fed’s need to focus on price stability, but stopped short of hinting at any policy action at the next rate-setting meeting in September. Comments around price stability mostly echoed statements that Warsh has previously made following Fed meetings. While equities didn’t see much intraday volatility following the address, it’s worth noting that odds for a September rate increase versus holding steady slightly favor a hike compared to odds favoring no change in rates before (chart below).

While declining to provide any sort of forward guidance, Warsh did note that financial conditions could not be described as restrictive. If anything, overall financial conditions are running at extremely loose levels based on a measure released by the Fed’s Chicago district in the chart below where a reading below zero indicates looser than average conditions. Loose conditions point to relatively cheap and plentiful credit, which is associated with positive economic activity and is a tailwind for asset prices. Extremely loose conditions should give the Fed plenty of cover to raise rates at a gradual pace if it chooses to do so. It will be hard to justify keeping rates steady with an economy showing strong activity while the most recent PCE price index came in at 3.7% in July compared to last year. Inflation has remained above the Fed’s 2% target for over five years.

While stocks could be vulnerable to short-term volatility around uncertainty to the rate outlook along with approaching mid-term elections, it’s hard to see a tightening cycle repeating 2022’s pace of rate hikes. Loose financial conditions and evidence of positive economic activity that supports the earnings outlook should keep the bull market moving forward. Keep reading to see:

• Open ETF positions.

• Open stock positions.

• Chart analysis for new trade ideas.

Read more

Today’s update will cover:

• Why the bond buyback won’t work.

• One chart pointing to a strong earnings outlook.

• What copper has to do with the outlook for rate hikes.

• Chart setups in …

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Now for this week’s issue…

A turbulent week for equities featured evidence of a strengthening economy coupled with efforts by the U.S. Treasury to stem the jump in longer-dated yields.

A report from S&P Global showed their U.S. Flash PMI jumping to 56.0 compared to 54.5 last month. A reading over 50 indicates expansion, with the monthly gains concentrated in the service sector of the economy.

That was the highest reading in over four years and adds to recent reports showing economic activity holding up. At the same time, no resolution to the conflict in the Middle East is keeping pressure on oil prices.

The inflationary implications of an accelerating economy and high oil prices is pushing long-term interest rates higher. The rate on the 30-year U.S. Treasury hit 5.31% last week…the highest level in 19 years.

A day later, U.S. Treasury Secretary Scott Bessent announced that a buyback program targeting long-term bonds would at least double in size to $4 billion. While the move is being described as providing liquidity, the real reason is a form of yield curve control.

Short-term bonds will be issued to fund proceeds for the buyback program, meaning there should not be a net change in money supply as a result. It’s also worth noting the program size is nothing compared to the amount of Treasuries outstanding that’s now crossing above $40 trillion.

But the intervention shows that officials are watching rates with concern and are willing to take action to stem the rise in yields…potentially hinting at more action ahead should rates not respond.

The intervention ignited a move in assets sensitive to the outlook for liquidity, including gold and Bitcoin. That hints at market concerns over currency debasement should measures like quantitative easing make a return to contain interest rates.

This week, let’s look at evidence that the economy is holding up much better than feared against geopolitical uncertainty and how that’s benefiting the average stock. We’ll also look at the jump in bond yields around the world that’s prompting intervention.

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The Chart Report

Against geopolitical uncertainties and elevated energy prices, economic data is holding up rather well. The Atlanta Fed’s GDPNow model is estimating third quarter growth at 4% while another report shows accelerating activity in the domestic manufacturing and service sector of the economy. S&P Global’s Flash U.S. PMI came in at 56.0 compared to 54.5 last month where reading over 50 indicates expansion. The monthly gains were concentrated in the service sector of the economy. The chart below overlays the U.S. composite PMI with annualized GDP growth, with the PMI hitting the highest level in over four years.

Commodity prices sensitive to economic activity are holding near record levels and are setting up to potentially breakout. Copper is used in a variety of construction end markets and is also seeing a boost from AI capex pouring into data centers. Copper prices traded on the LME (which is a better global benchmark) broke to record highs from a large ascending triangle pattern that formed over several years. In the near-term, copper is forming another ascending triangle continuation pattern which could see copper prices make another run higher. That would confirm recent strong economic data but also be a warning on the outlook for inflation.

With the underlying economy holding up, that should benefit the earnings outlook for the average stock. So far in 2026, stock market leadership is rotating away from companies leveraged to AI like the Mag 7 and into the the average stock. You can see in the chart below that the equal-weight S&P 500 is outpacing the capitalization weight index and is well ahead of the Mag 7 year-to-date. That also speaks to broadening participation in the bull market and runs counter to concerns that gains are being narrowly concentrated in stocks most geared to AI infrastructure spending like semiconductors.

Interest rates around the world are on the rise as inflation pressures collide with concerns over rising debt levels and persistently high government budget deficits. The black line in the chart below shows the median bond yield for advanced economies. Rising rates prompted the U.S. Treasury to intervene in rate markets by doubling a buyback program to purchase long-term bonds. While the move is being described as providing liquidity, the real reason is a form of yield curve control where short-term bonds will be issued to fund proceeds for the buyback program. The intervention shows that officials are watching rates with concern and are willing to take action to stem the rise in yields.

Heard in the Hub

The Traders Hub features live trade alerts, market update videos, and other educational content for members.

Here’s a quick recap of recent alerts, market updates, and educational posts:

• When will rising rates impact stocks.

• The surprising trend in recent investor sentiment views.

• The S&P 500’s next move based on this cycle composite.

• How I’m using weekly charts to determine the state of the trend.

• Loose financial conditions remain a massive tailwind for stocks.

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Trade Idea

Ero Copper (ERO)

Copper mining stock that ran up to the $40 level in January and trading in a sideways basing pattern. The stock is recently testing resistance but with the MACD extended. Need a smaller pullback and MACD reset before breaking out to new highs.

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Come join us over at the Hub as we seek to capitalize on stocks and ETFs that are breaking out!

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And if you have any questions or feedback, feel free to shoot me an email at mosaicassetco@gmail.com

Disclaimer: these are not recommendations and just my thoughts and opinions…do your own due diligence! I may hold a position in the securities mentioned in this report.

These ideas are the end result of my process to identify stocks offering the right combination of growth fundamentals along with a proper chart setup. Live alerts are sent to Traders Hub members only.

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Stock Market Update

A report pointing to rising economic activity and easing inflationary pressures coupled with renewed efforts to lower long-term interest rates is boosting sectors sensitive to liquidity. The latest data covering activity in the domestic manufacturing and service sector of the economy show activity expanding at an accelerating pace, with S&P Global’s Flash U.S. PMI coming in at 56.0 compared to 54.5 last month. A reading over 50 indicates expansion, with the monthly gains concentrated in the service sector of the economy. The chart below overlays the U.S. composite PMI with annualized GDP growth, with the PMI hitting the highest level in over four years.

While the PMI report shows output prices remaining above the 50 threshold, recent months have seen a deceleration alongside some moderation in consumer inflation. That hasn’t stopped longer-dated Treasury yields from rising to the highest levels seen in nearly 20 years, so the U.S. Treasury is stepping in to intervene by doubling a buyback program to purchase long-term bonds. While the move is being described as providing liquidity, the real reason is a form of yield curve control where short-term bonds will be issued to fund proceeds for the buyback program. The program size will increase to at least $4 billion, which is a negligible amount relative to the amount of Treasuries outstanding that’s crossing above $40 trillion (chart below). But the intervention shows that officials are watching rates with concern and are willing to take action to stem the rise in yields.

More evidence of a strong economy that supports the earnings outlook and moves to boost liquidity are more tailwinds for the stock market and are delivering a boost to liquidity-sensitive asset classes including gold and Bitcoin. Gold mining stocks are back to showing relative strength, and are setting up new basing patterns.

Keep reading to see:

• Open ETF positions.

• Open stock positions.

• Chart analysis for new trade ideas.

Read more

Today’s update will cover:

• When will rising rates impact stocks.

• The surprising trend in recent investor sentiment views.

• The S&P 500’s next move based on this cycle composite.

• Ho…

Read more

These ideas are the end result of my process to identify stocks offering the right combination of growth fundamentals along with a proper chart setup. Live alerts are sent to Traders Hub members only.

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Stock Market Update

A pair of reports showing moderating inflation is helping keep the outlook for monetary policy from turning too hawkish. Last week featured the Consumer Price Index (CPI) and Producer Price Index (PPI) for the month of July. The headline CPI figure came in at 3.4% compared to last year while the core figure that excludes food and energy prices increased by 2.5%. The headline PPI jumped 4.7% while the core reading registered 4.2% year-over-year. The readings all around continued moderating from June’s pace but remain well above the Federal Reserve’s stated target of 2% annual inflation. In fact, the core CPI measure hasn’t registered a reading below 2% since early 2021. The chart below shows various core components for the CPI, including the “supercore” made up of core services ex-housing to track labor-intensive industries.

While producer and consumer inflation levels remain above target, the falling rate of change compared to prior months is boosting hopes that interest rate hikes by the Fed will either be delayed or lessen in magnitude. Current market-implied odds favor the Fed holding rates steady at the next meeting in September, followed by one hike before year-end (chart below). Following one quarter point hike, the Fed is projected to hold rates steady through next year. However, it’s worth noting that the current level of the 2-year Treasury yield sits 0.42% higher than the current upper target of the fed funds range, implying a slightly more hawkish take from the bond market.

The current economic and liquidity backdrop should remain supportive for equities. While uncertainty ahead of midterm elections could present volatility, the combination of loose financial conditions (boosted by renewed optimism around the Fed) coupled with rising forward earnings estimates should be bullish tailwinds for stocks. Keep reading to see:

• Open ETF positions.

• Open stock positions.

• Chart analysis for new trade ideas.

Read more

Today’s update will cover:

• A boost for the economy on the horizon.

• Why today’s CPI report doesn’t let the Fed off the hook.

• Consolidations in leading sectors are running their co…

Read more

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Now for this week’s issue…

An oversold rally in AI infrastructure stocks is being amplified by growing optimism that tighter monetary policy could be delayed.

A massive rally from a failed pattern breakdown has seen the S&P 500 gain 5.7% in just a four-day period while the Nasdaq-100 Index jumped by 9.3% for its best stretch since rally off the April 2025 tariff-driven selloff.

While the average stock has been gaining, the short-term rally failed to generate any sort of breadth thrust that tends to bode well for forward returns over longer time frames.

At the same time, investors are growing hopeful that interest rate hikes from the Federal Reserve could be on hold following a much weaker than expected payrolls report for the month of July.

The jobs report showed a loss of 23,000 jobs during July compared to expectations for a gain of 80,000. The prior two months were also revised lower by 103,000 jobs, which brings the three month average job creation to just 20,000 (chart below).

A week ago, market-implied odds strongly favored a rate hike at the Fed’s next meeting in September. Those odds now slightly favor the Fed keeping rates on hold, with just one hike before pausing well into next year.

But not all economic data is showing deceleration. A pair of reports on the manufacturing and services sector of the economy shows accelerating activity, with one indicator suggesting a positive outlook as well.

This week, let’s look at the strong short-term rally in the major indexes and if participation in the trend has been strong enough to trigger breadth thrusts. We’ll also look at a key sector behind the rally, and if the broader economy is really as weak as July payrolls suggests.

The Chart Report

A failed breakdown sparked a massive move in the S&P 500. The chart below shows a symmetrical triangle pattern for the S&P, which had been forming since the last peak in the index in early June. Narrowing price action are shown with the dashed lines, where a symmetrical triangle often resolves in the direction preceding the pattern. But a one day breakdown looked like the S&P was losing support, which was strongly reversed in the next trading session. Failed moves can often see a strong reversal in the opposite direction, with the index subsequently rallying 5.7% in just four days to jump to new record highs.

Any time the major indexes see a short-term burst to the upside, you should be on the lookout for breadth thrusts that can lead to strong forward returns over longer periods. Thrusts indicate the presence of institutional investors which are needed to sustain an advance. But breadth around the recent gains in the S&P 500 has been lackluster at best. The chart below shows the ratio of advancing stocks to declining issues on the NYSE. The best reading for the A/D ratio during the S&P’s strong stretch was 2.4, which you can see is nothing special and nowhere near the best reading of the year. I kept the A/D thrust from last April in the chart for context.

The lack any breadth thrusts during the recent gains points to a rally driven by beaten up AI infrastructure stocks. Companies leveraged to AI capex, particularly semiconductors, saw massive gains into late June driven by optimism over earnings by an ever increasing capex spend by hyperscalers. Optimism quickly soured and sharp drawdowns were seen across the sector, which has seen a mean-reverting rally from a deeply oversold condition to start the month. The AI trade has become very bifurcated between chip stocks and hyperscalers. The chart below shows a 20-day rolling correlation between hyperscaler and semiconductor excess returns, which used to be strongly correlated. But that started changing especially during 2026, where the correlation has now become strongly negative.

While concerns over the underlying health of the economy are ramping higher following the disappointing July payrolls report, weakening data isn’t being seen in other key reports. For instance, initial jobless claims were reported at just 199,000 last week, which has remained near historically low levels. Other data released last week from the ISM shows both the manufacturing and service sector of the economy holding up just fine, while the leading new orders components in each report remains in expansionary territory. In the ISM’s manufacturing report, the spread between new orders and inventories is widening (chart below), which tends to be a good sign for future economic activity.

Heard in the Hub

The Traders Hub features live trade alerts, market update videos, and other educational content for members.

Here’s a quick recap of recent alerts, market updates, and educational posts:

• A pattern to tip the S&P 500’s next move.

• How we’re surviving the momentum massacre.

• Why return dispersion is signaling a major transition.

• How to use relative strength to find new momentum leaders.

• Breaking down two chart patterns emerging in new trade ideas.

You can follow everything we’re trading and tracking by becoming a member of the Traders Hub.

By becoming a member, you will unlock all market updates and trade alerts reserved exclusively for members.

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Trade Idea

Trekor Metals (TGB)

The stock peaked near the $9 level back in February and now recently testing resistance. The setup needs one more smaller pullback off that level followed by a move over $9 with confirmation by the relative strength line.

Key Upcoming Data

Economic Reports

Earnings Reports

I hope you’ve enjoyed The Market Mosaic, and please share this report with your family, friends, coworkers…or anyone that would benefit from an objective look at the stock market.

Share

Become a member of the Traders Hub to unlock access to:

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Our model portfolio is built using a “core and explore” approach, including a Stock Trading Portfolio and ETF Investment Portfolio.

Come join us over at the Hub as we seek to capitalize on stocks and ETFs that are breaking out!

Subscribe now

And if you have any questions or feedback, feel free to shoot me an email at mosaicassetco@gmail.com

Disclaimer: these are not recommendations and just my thoughts and opinions…do your own due diligence! I may hold a position in the securities mentioned in this report.

These ideas are the end result of my process to identify stocks offering the right combination of growth fundamentals along with a proper chart setup. Live alerts are sent to Traders Hub members only.

Subscribe now

Stock Market Update

A big miss on nonfarm payrolls is shifting the narrative around the Federal Reserve and outlook for monetary policy. The July jobs report showed that 23,000 jobs were lost during the month (chart below) compared to expectations for a gain of 80,000. At the same time, the prior two months were revised lower 103,000 jobs while the unemployment rate decreased due to a drop in labor force participation. While there could be distortions in the data around seasonal adjustments and impact of World Cup, the poor report is being greeted with enthusiasm by the stock market which is rallying in the immediate aftermath of the data.

That’s because bad news on the economic front is being interpreted as taking the pressure off the Fed to hike interest rates. Market-implied odds now slightly favor the Fed keeping rates steady at the next meeting followed by just one rate hike before holding steady well into next year. One bad jobs report doesn’t mark a trend, but investors need to keep in mind that stock prices follow earnings over the long run. Other data released this week shows both the manufacturing and service sector of the economy holding up just fine, while the leading new orders components remain in expansionary territory. In the ISM’s manufacturing report, the spread between new orders and inventories is widening, which tends to be a good sign for future economic activity (chart below).

The next big catalyst to steer the direction of the Fed will be the CPI inflation report due out next week. The S&P 500 also remains in a volatile stretch of seasonality for the next couple months, with new trade setups continuing to fill out basing patterns. Keep reading to see:

• Open ETF positions.

• Open stock positions.

• Chart analysis for new trade ideas.

Read more

Today’s update will cover:

• The underlying strength of the economy.

• When it’s time to just close your eyes and buy.

• The S&P 500’s reversal from a failed breakdown.

• Dead cat bounce …

Read more

If you find this report helpful please hit that “like” button, share this post, and become a subscriber if you haven’t already done so!

🚨And be sure to check out Mosaic Traders Hub. It’s a members-only platform to alert trade ideas, track a model portfolio of open positions, and further analyze the message coming from the capital markets.

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Now for this week’s issue…

Surging volatility in the semiconductor sector is colliding with uncertainty over the next move in interest rates.

Chip stocks have collectively fallen into bear market territory after leading the AI bull market higher into late June. Optimism over data center infrastructure spending is being met with extended stock prices.

South Korea’s KOSPI Index has become a key barometer for the AI trade, with the Index price action being driven by Samsung and SK Hynix. You can see in the chart below that the KOSPI has fallen by over 35% from the high and is finding support at the 200-day moving average (green line).

At the same time, growth stocks in general are susceptible to the evolving rate outlook following the Federal Reserve’s latest meeting. While the Fed held rates steady as expected, a lack of forward guidance is leaving investors in the dark on the path for monetary policy.

New Fed chair Kevin Warsh saw three dissenting votes against the decision to keep rates unchanged, with several officials preferring to increase rates as inflation pressures build.

That’s the most dissent for a new Fed chair since the early 1970s, while Warsh refused to provide forward guidance on rates while sounding hawkish on developments with inflation.

The lack of direction led to a jump in volatility across asset classes. In the aftermath of the Fed meeting, longer-dated yields jumped while stocks and the U.S. Dollar Index sold off. Warsh’s commitment to revamping how the Fed communicates is leaving investors in the dark.

This week, let’s look at big moves underway in interest rate and currency markets following the Fed meeting, and how that could be playing a role in driving speculative growth stocks lower. We’ll also look at seasonality and the return of bearish headwinds over the next couple of months.

The Chart Report

Massive moves are underway across key segments of the capital markets following the latest Fed rate-setting meeting. One of the most impactful moves could be unfolding in Treasury yields. Leading indicators of short-term interest rates continue pointing to rate hikes on the short-end, like with the 2-year Treasury yield that sits at 4.28%. Market-implied odds also point to two quarter-point rate hikes in the next six months. On the long-end, the 30-year Treasury yield is attempting another breakout over the 5% level. Following a failed move above 5% back in May, this time the 30-year rate is holding its move higher and sits at the highest level since 2007.

Volatility in the semiconductor sector is sending high beta momentum stocks to one of their worst monthly returns ever. Optimism over AI infrastructure spending helped boost earnings forecasts particularly in the semiconductor sector. That sparked surging share prices across the sector into late June, where a combination of mean-reversion and rate fears are now driving a massive reversal lower. Collectively, a basket of high beta momentum stocks tracked by Goldman Sachs posted its worst monthly performance in history during July (chart below)

The U.S. Dollar Index is seeing a sharp reversal lower from a double-top pattern after testing resistance near the 102 level in the chart below, and is now losing support at the 50-day moving average (black line). While part of the move is being driven by speculation over intervention to support the yen, the pullback in the dollar has implications for other market sectors. The broader commodities trade is heating up once again, while developed international equities are nearing a breakout from a multi-month basing pattern. Both asset classes could receive a boost from a weaker dollar.

The S&P 500 bucked the historical tendency for the stock market to post strong returns during July, with the index finishing down slightly for the month. Based on multiple lookback periods, seasonality becomes a much stronger headwind over the next couple months. You can see in the chart below that August and September are consistently one of the worst months for average returns over various lookback periods including midterm election years. Seasonal tailwinds pick back up at the start of the fourth quarter.

Heard in the Hub

The Traders Hub features live trade alerts, market update videos, and other educational content for members.

Here’s a quick recap of recent alerts, market updates, and educational posts:

• A pattern to tip the S&P 500’s next move.

• How we’re surviving the momentum massacre.

• Why return dispersion is signaling a major transition.

• How to use relative strength to find new momentum leaders.

• Breaking down two chart patterns emerging in new trade ideas.

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Trade Idea

Compass Inc (COMP)

The stock is forming a cup with handle basing pattern since February. The handle area is resetting the MACD above the zero line. I’m watching for a move to new highs above the $14 level.

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Disclaimer: these are not recommendations and just my thoughts and opinions…do your own due diligence! I may hold a position in the securities mentioned in this report.

These ideas are the end result of my process to identify stocks offering the right combination of growth fundamentals along with a proper chart setup. Live alerts are sent to Traders Hub members only.

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Stock Market Update

Disagreement and uncertainty over the forward path of monetary policy is rising at the Federal Reserve. While the central bank left policy rates unchanged as widely expected, there were three dissenting votes against the action where officials preferred a rate hike. It was the largest number of dissenting votes early into a new Fed chair’s term since the 1970s and highlights the growing divide within the Fed as consumer inflation pressures mount. Fed Chair Kevin Warsh continued to portray a hawkish view toward inflation, and reaffirmed the Fed’s commitment to a 2% inflation target. Following the meeting, massive moves are underway across key segments of the capital markets. That includes the 30-year bond yield, which is building on another attempt to breakout over the 5% level (chart below).

There’s also an outsized move happening in currency markets. The U.S. Dollar Index is seeing a sharp reversal lower from a double-top pattern after testing resistance near the 102 level in the chart below, and is now losing support at the 50-day moving average (black line). While part of the move is being driven by speculation over intervention by Japanese officials to support the yen, the pullback in the dollar has implications for other market sectors. The broader commodities trade is heating up once again, while developed international equities are nearing a breakout from a multi-month basing pattern (more on that in our trade ideas below).

Other sectors seeing a recent pullback are trying to find traction in the wake of the Fed meeting, including semiconductor stocks. While time will be needed to see new bases evolve with that group, plenty of relative strength is emerging elsewhere. Keep reading to see:

• Open ETF positions.

• Open stock positions.

• Chart analysis for new trade ideas.

Read more

Today’s update will cover:

• A pattern to tip the S&P 500’s next move.

• How we’re surviving the momentum massacre.

• Why return dispersion is signaling a major transition.

• How to use r…

Read more

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Now for this week’s issue…

Interest rates across the yield curve are on the rise while major stock market indexes are breaking below key support levels.

A crumbling ceasefire between the U.S. and Iran is halting traffic through the Strait of Hormuz once again and causing a jump in oil prices. Oil has gone from $69 per barrel at the start of July to $89 currently.

While the most recent Consumer Price Index (CPI) report for June showed moderating inflation from a pullback in energy prices, the resurgence of the conflict in the Middle East is pressuring the inflation outlook all over again.

The 2-year Treasury yield that tends to lead key inflection points in monetary policy hit a fresh high for 2026 at 4.37%, and is the highest level since the start of 2025. It also sits well above the current target for the fed funds rate.

The 30-year Treasury yield is also testing a key breakout level once again. In May, the 30-year yield saw a false break above the 5% level which has served as resistance since late 2023. With oil prices on the rise and the inflation outlook uncertain, the 30-year is attempting another breakout (chart below).

Rising rates across the yield curve could keep pressuring stock prices, where indexes like the S&P 500 and Nasdaq peaked in early June and are now losing key support levels.

At the same time, market breadth is deteriorating while the backdrop for seasonality is transitioning from a bullish tailwind to bearish headwind. Seasonality during mid-term election years also tends to produce lower average returns and larger drawdowns.

This week, let’s look at the bearish headwinds stacking up against the stock market across breadth and historic seasonal trends. We’ll also look at the chart pointing to interest rate hikes happening soon.

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The Chart Report

Major indexes like the S&P 500 peaked in early June and have been chopping sideways since then. The price action created symmetrical triangle pattern, which is seeing a bearish break last week. Symmetrical triangles tend to be continuation patterns, which means the pattern should resolve in the direction preceding the setup. In this instance, you would have expected a bullish resolution. But over the past week, you can see the S&P 500 is close to breaking the lower trendline in the chart below. The S&P already lost one key support level with the 50-day moving average (MA - black line). If trendline support in the triangle gives way, that could set up a test of the 200-day MA (green line) that’s currently near the 7,000 level (or 5% downside from current levels).

While the indexes like the S&P 500 and Nasdaq are starting to flash bearish signals, there’s already been deterioration in the average stock under the hood. The number of stocks across major exchanges trading in short-term uptrends has been turning lower since the start of July following a tepid recovery. You can measure that with the percent of stocks trading above their 20-day MA in the chart below (which also overlays the metric with the S&P 500). The percent of stocks in short-term uptrends stood at 63% in early July and is seeing a sharper deterioration in the past two weeks. Currently at 42%, you can see in the chart that oversold conditions tend to emerge below the 30% level which means there could be more downside in the near-term.

The S&P 500’s mild pullback in July runs counter to what is a historically strong stretch for the stock market. July ranks as one of the best months for average returns and win rate over various lookback periods for the S&P 500. While there is still one more week of trading remaining, the calendar is about to become much more bearish in the months ahead. The chart below shows the average monthly performance for the S&P, Nasdaq, and Dow going back to 1990. August and September ranks as the worst months for average returns, while midterm election years are also notorious for volatility heading into elections.

Massive moves are underway across the yield curve despite a weaker than expected consumer inflation report. The most recent June CPI report showed an increase of 3.5% year-over-year while the monthly change dropped by 0.4%. The annual gain was less than expected while the monthly decline was the largest decrease since April 2020. But as tensions in the Middle East intensify and oil prices rapidly increase, interest rates are jumping across maturities. That includes the 2-year yield that tends to lead fed funds is now at 4.31% and sits well above the Federal Reserve’s target range (chart below). Market-implied odds are now showing two quarter-point rate hikes now being priced for 2026.

Heard in the Hub

The Traders Hub features live trade alerts, market update videos, and other educational content for members.

Here’s a quick recap of recent alerts, market updates, and educational posts:

• The upside of strict trade entry criteria.

• The historic crash in the momentum factor.

• Why I’m excited about new semiconductor positions.

• A new core investment portfolio position I’m monitoring.

• The outsized impact of the dollar on this sector’s performance.

You can follow everything we’re trading and tracking by becoming a member of the Traders Hub.

By becoming a member, you will unlock all market updates and trade alerts reserved exclusively for members.

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Trade Idea

State Street SPDR S&P Aerospace & Defense ETF (XAR)

Aerospace ETF trading in a basing pattern since January. The MACD needs to recover back above zero. Ideally we see another test of resistance at $300 followed by another smaller pullback before breaking out.

Key Upcoming Data

Economic Reports

Earnings Reports

I hope you’ve enjoyed The Market Mosaic, and please share this report with your family, friends, coworkers…or anyone that would benefit from an objective look at the stock market.

Share

Become a member of the Traders Hub to unlock access to:

✅Model Portfolio

✅Members Only Chat

✅Trade Ideas & Live Alerts

✅Mosaic Vision Market Updates + More

Our model portfolio is built using a “core and explore” approach, including a Stock Trading Portfolio and ETF Investment Portfolio.

Come join us over at the Hub as we seek to capitalize on stocks and ETFs that are breaking out!

Subscribe now

And if you have any questions or feedback, feel free to shoot me an email at mosaicassetco@gmail.com

Disclaimer: these are not recommendations and just my thoughts and opinions…do your own due diligence! I may hold a position in the securities mentioned in this report.

These ideas are the end result of my process to identify stocks offering the right combination of growth fundamentals along with a proper chart setup. Live alerts are sent to Traders Hub members only.

Subscribe now

Stock Market Update

Massive moves are underway across the yield curve despite a weaker than expected consumer inflation report. Last week, the June Consumer Price Index (CPI) showed an increase of 3.5% year-over-year while the monthly change dropped by 0.4%. The annual gain was less than expected while the monthly decline was the largest decrease since April 2020. But as tensions in the Middle East intensify and oil prices rapidly increase, interest rates are jumping across maturities. The 2-year yield that tends to lead fed funds is now at 4.31% and sits well above the Federal Reserve’s target range. Longer-dated yields are rising as well, with the 30-year rate attempting another breakout above the 5% level in the chart below.

That shows the market isn’t buying into a narrative of moderating inflation despite the most recent CPI report, which could pressure equity prices. Stocks are sensitive to rising yields due to the impact on valuations and competition for investor capital. Rising rates on the short-end also points to tightening monetary policy, where market-implied odds are now pricing two rate hikes by year end. That’s placing downward pressure on stock indexes, especially those more exposed to growth like the Nasdaq-100 Index that’s already broken down from a triangle pattern. The S&P 500 is now testing trendline support of its own triangle pattern while also moving below the 50-day moving average in the chart below.

It’s also worth noting that the S&P 500 is now exiting a favorable seasonal period that runs into late July, with history suggesting a volatile period through September. That could especially be the case given midterm elections on the horizon and as uncertainty in the Middle East climbs again. But as I noted in my video update to Hub members, a period of basing action in stocks leveraged to the AI trade (like semiconductors) could setup the next round of breakouts. Keep reading to see:

• Open ETF positions.

• Open stock positions.

• Chart analysis for new trade ideas.

Read more

Today’s update will cover:

• The upside of strict trade entry criteria.

• The historic crash in the momentum factor.

• Why I’m excited about new semiconductor positions.

• A new core inve…

Read more