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 are contending with an uncertain interest rate outlook following the Federal Reserve’s latest rate-setting meeting. While the meeting carried a hawkish tone over inflation concerns along with a strong economic backdrop, the peace deal between the U.S. and Iran has seen oil prices return to levels before the conflict started. But as a reminder of the recent impact of soaring energy prices, a consumer inflation report jumped to levels not seen in over three years. The PCE price index - the Fed’s preferred inflation gauge - increased by 4.1% in May compared to last year. The core figure that strips out the impact of food and energy prices rose by 3.4% and hasn’t been at the Fed’s 2% inflation target since early 2021 (chart below).
While the inflation picture continues to worsen, the average stock has been gaining ground on the capitalization-weighted indexes recently. That likely reflects evidence of broadening economic activity, which supports the earnings outlook outside of the AI trade. Bullish factors could be lining up to push the rally further into the month ahead. Investor positioning isn’t stretched while various surveys of investor sentiment like the AAII report on retail investors shows bearish views running above the historical average. At the same time, the S&P 500 is about to enter one of the best months of the year for calendar seasonality. While weakness in the back half of June is common, July ranks as the best performing month over the past 20 years (chart below).
Expanding breadth has been a tailwind to trade setups, where we’ve been focusing new exposure to sectors showing relative strength like biotech. Strong earnings from Micron Technology (MU) is helping boost our other tech and AI positions. Keep reading to see:
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Chart analysis for new trade ideas.
