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
Investors initially cheered a much weaker than expected June payrolls report along with negative revisions to prior months. The economy created just 57,000 jobs during June compared to estimates for 115,000, while May and April’s figures were revised lower by a combined 74,000 jobs. The knee-jerk reaction from investors was to push stock index futures higher, signaling a regime where bad economic news is good for stocks due to the impact on the rate outlook. While odds for a rate hike turned more dovish immediately following the report, eventually the outlook reverted back to a similar scenario before the payrolls report which is an anticipated rate hike at the Fed’s September meeting. Overall, the recent trend in payrolls is inflecting higher based on the three- and six-month moving averages (chart below).
The reality is that the payrolls report reflects a “Goldilocks” figure for the average stock, which isn’t too cold to stoke growth fears and not too hot to pull additional rate hikes forward. While the S&P 500 finished the day flat following the jobs report, there continues to be a massive rotation under the hood. Large-cap value stocks finished the day up 1.20% while large growth was down 1.51%. Excessive momentum in the AI infrastructure trade continues to be unwound while the average stock gets a boost on the broadening economic growth outlook. While the payrolls report is in focus, an updated report on manufacturing activity in June from the ISM survey shows the leading new orders component remaining firmly in expansion territory above the 50 level (chart below).
The key to navigating the rotation is to be proactive taking profits on positions with large gains while seeking out relative strength in new setups. Charts showing sound basing structures in companies with a strong fundamental growth profile remains our primary focus. Keep reading to see:
Open ETF positions.
Open stock positions.
Chart analysis for new trade ideas.
