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
For the first time in over three years, the Federal Reserve hiked interest rates by a quarter point to a range of 3.75% to 4.0% and signaled there could be additional increases ahead. Fed Chair Kevin Warsh acknowledged that economic and labor market activity aren’t cause for concern while the meeting statement reiterated that the Fed will “deliver price stability”. Warsh also described the action as removing “a dose of accommodation”, which implies that the central bank still sees the current stance of monetary policy as being stimulative to the economy rather than being restrictive. Following the meeting, market-implied odds now favor three additional rate hikes into mid-2027 (table below).
The 2-year Treasury yield, which warned of tighter monetary policy, still sits at 4.67% or 67 basis points above the upper end of the Fed’s new target. The bond market also favors more rate hikes ahead, and signs of an economy expanding at a solid pace could place additional pressure on the Fed to act. A report on retail sales showed a 1.2% monthly gain in August which was the strongest increase in five months. Strong consumer spending is helping boost GDP estimates, with the Atlanta Fed’s GDPNow estimate running at 5.1% annualized for the third quarter (chart below). The estimate is also receiving a boost from inventory restocking which bodes well for future economic activity.
While investors are wondering what the Fed’s rate hiking cycle means for the S&P 500, evidence of strong economic growth should help keep the earnings outlook in tact. As long as the Fed is hiking at a measured pace that doesn’t call into question the growth outlook, the rally in equities can persist.
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