In this post, I’ll focus on setups that I’m monitoring for both long and short positions. With a chart and short write-up, this is a quick way to scan and plan potential trades.
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.
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.
