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
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.
