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
Following the latest reports on consumer and producer inflation, expectations are now running high that the fed will hike rates at their meeting this week. The Producer Price Index (PPI) jumped 5.4% in August while the core measure that excludes food and energy prices gained by 4.6%. The Consumer Price Index (CPI) came in at 3.4% year-over-year while the core measure increased by 2.4%. While consumer inflation isn’t showing signs of renewed acceleration, Fed officials are growing impatient with inflation running above the 2% target (chart below). That comes on the heels of the August payrolls report that showed 162,000 jobs created during the month. As a result, market implied odds now show an 86% chance of a Fed rate hike this week.
Despite the latest market odds pivoting to anticipate tighter monetary policy, stocks finished the week with strong gains. That followed the development of an oversold breath condition, which you can see with the percentage of stocks trading above their 20-day moving average in the chart below. The breadth metric dropped below 30%, which has coincided with bottoms around prior selloffs over the past year. Despite the recent rebound, I would continue being mindful of difficult calendar seasonality especially during the lats two weeks of September that are historically one of the worst two-week stretches of the year.
I would prefer to see one more push lower in breadth metrics to reach into deeply oversold territory. Then if stocks do start to rally from an oversold breath condition, focus on sectors showing the best relative strength. Stock in copper miners, select semiconductors, and gold mining stocks are worth following closely for new breakouts. Keep reading to see:
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