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 problem is brewing for the Federal Reserve. The same day that the Fed concluded its latest rate-setting meeting and voted to keep rates steady, the Producer Price Index (PPI) for the month of February gained more than expected. The headline PPI jumped by 3.4% compared to last year while the core figure that excludes food and energy prices increased by 3.9%. PPI inflation will often lead changes in consumer inflation measures, with inflation reports not yet reflecting the breakout of war in the Middle East and ensuing impact on energy prices.
During his post-meeting press conference, Fed chair Jerome Powell acknowledged the economic impact of the war on Iran is uncertain while also reiterating the Fed’s long-term inflation target is 2%. But the Fed’s preferred measure of consumer inflation (the PCE price index) hasn’t been below that level since February 2021 (chart below) while the central bank’s updated economic projections shows the median forecast for PCE inflation rising to 2.7% in 2026 versus 2.4% in the prior estimate. As I’ve outlined frequently, leading indicators of inflation and inflation-sensitive sectors are warning of higher price levels ahead, and that was before the jump in energy prices.
Not surprisingly, the S&P 500 has moved into a regime of strong negative correlation to oil prices. The longer the conflict in the Middle East drags on, the more upside pressure on oil prices and impact on the outlook for monetary policy. Traffic through the Strait of Hormuz remains at a standstill (chart below), which is impacting energy and fertilizer supplies. While stocks could still rally in the near-term from an oversold condition, the longer-term outlook is facing serious challenges from inflation and the interest rate outlook.
For our model portfolio, we continue trimming open positions hitting trailing stops while focusing new exposure on industries showing relative strength, including one one new addition this week. Keep reading to see:
Open ETF positions.
Open stock positions.
Chart analysis for new trade ideas.
