Welcome back everyone!
For the ones who missed the update at the beginning of the week: Lightning fried my internet over the weekend which wasn’t able to get back up to late Tuesday. Currently dealing with slow speeds at this time which will be resolved by early next week but will not get in the way of any posting. Thanks for being patient this week.
Let’s now cover massive developments that have taken place in the last week.
The overall index declined by 0.4% month-over-month, which was the largest one-month decrease since April 2020. This brought the annual inflation rate down to 3.5%, a noticeable drop from 4.2% in May. Core inflation, which excludes volatile food and energy prices, was flat at 0.0% month-over-month. On an annual basis, core CPI cooled slightly to 2.6%. The primary catalyst for the decline was a 5.7% drop in the energy index, driven by a 9.7% plunge in gasoline prices following a temporary US-Iran ceasefire.
Markets had been closely watching the June report to see if a rate hike would be necessary at the Fed's July meeting. The outright decline in headline inflation and flat core reading effectively removes the pressure for an immediate hike.
Major downside to the recent CPI report is the fact Oil is climbing right back up. In the last five sessions we have witnessed Oil rally over 12% which completely wipes out plenty of the progress made on the last report.
Iran has also come forward with claims that they have no interest in negotiating with the US for peace. At the same time, President Trump has claimed that Iran called and is looking for peace. All we need to do is pay close attention to Oil and see where the bluff is. As of right now, the US seems to be lying. Now let’s analyze the indexes to see where we stand before moving into all the stocks.
Indexes
All four indexes are still well into a power trend with the Dow, Nasdaq, and S&P, pushing higher with the current 12 week trend. Tech continues to hold strong as the Nasdaq EMA Difference is well above 4%. The current environment for the market will remain in dip buying at the 10-Week EMAs for bounces back up to new ATH.
SPY
Strong bounce back in the last three weeks which puts the index right back up to ATH. Weakening MACD while both moving averages continue to curl higher. Priming for another leg higher to inch closer to the 780 target this year. Needs to remain above the 10-Week EMA to naturally drift stocks higher. Every single factor about this chart is pointing bullish.
QQQ
Tech overall weaker recently but this is only a time of cooling off. Soon we will see another explosion sending the Nasdaq right up to new highs. Even with the large hit to stocks we have yet to post a weekly close below the 10-Week EMA. This is exactly what you want to see if your bullish. Neither of the EMAs have any signs of stalling which brings a a natural bid to the index.
Now we will take a look at the highest weighted stocks.
Looking back to the previous post, four stocks were approaching bearish territory. Every single one of them has recovered while MSFT, META, and TSLA continue to show weakness. As we said, avoid all the weak stocks and focus on what’s currently strong. Ride the momentum rather than trying to fight a stock you think should be heading higher. The time will come when we will buy these three stocks again but that time isn’t now.
Before moving on to all the setups we currently have already and ones to add this week, let’s touch on a massive winner, AAPL. We called on this long setup a while back which is up nearly 30% on commons in 4 months. The 300 calls are deep ITM as Apple hits fresh ATHs. This company is on the brink of breaking over $5 trillion market cap dethroning Nvidia as the largest company. Soon this stock will clear 350 sending the LEAPS well into the +200-400% range. Ass of right now the 300 strike Calls are up 123%.
Now let’s shift our focus to all the stocks currently long, setting up, along with any position changes this week.
