Welcome to another edition of the Power Trading and Markets newsletter, where we delve into the exciting world of markets and investments. But before we dive into the latest data, trends, and our weekly symbol, let's take a moment to reflect on the joys of life away from the trading desk.
Amidst a shortened trade week that witnessed markets predominantly trading higher, many of us had the pleasure of enjoying quality time with loved ones. For me, it was an annual tradition to join our dear friends Boris and Marina, who are known for hosting elaborate 4th of July celebrations that always leave us in awe. This year they invited over 100 people to their home.
Their ingenuity took center stage with the introduction of the Cold Spark Machine. A cold spark machine is a remarkable device that generates stunning visual effects by producing sparks without the need for traditional pyrotechnics or open flames. It operates by utilizing advanced technology to create a controlled electrical discharge, resulting in a mesmerizing display of sparks that are safe and cool to the touch. What sets the cold spark machine apart is its ingenuity in providing a visually captivating experience while minimizing the risks associated with traditional fireworks. This innovative invention allows for the creation of awe-inspiring effects in various events and settings, captivating audiences with its safe and extraordinary spark displays.
As sparks filled the air, igniting a sense of wonder within us, we couldn't help but admire the creative brilliance of our hosts. Boris and Marina have an uncanny knack for discovering new gadgets and innovations, and their passion for seeking out groundbreaking ideas extends beyond festive gatherings.
In fact, they were among the first to recognize many new gadgets and breakthroughs, including the remarkable potential of Tesla when it made its debut. By purchasing shares in the company during its early stages they have reaped the benefits of its phenomenal growth. Speaking of electric vehicles, it's worth mentioning that Tesla and Rivian, two trailblazers in the EV revolution, have recently reported record numbers of deliveries. These American-made vehicles are propelling us towards a greener future while reshaping the automotive industry - more on that in our Sector Spotlight.
But let's take a break from the financial world for a moment and indulge in a bit of summer fun. At Boris and Marina's event, after feasting on delectable dishes, we engaged in an epic water gun battle. Traditionally, we would split into crews, those participating in the water battle and those seeking shelter inside the house. However, this year brought a twist to the game.
Our hosts decided to close all the doors, leaving no escape routes for the drenched combatants. We found ourselves engaged in a relentless struggle for survival, reminiscent of the intensity depicted in the Hunger Games, albeit without the actual bloodshed!
The participation this year was nothing short of extraordinary, with almost all 100 guests enthusiastically joining in the water warfare. And to everyone's surprise, not a single police officer appeared to reprimand us for our boisterous revelry. As the day drew to a close, we raised our glasses in a toast, expressing our gratitude for living in the best country in the world - a nation that upholds the values of freedom and security.
It's during occasions like these that we gain a profound appreciation for the privileges we enjoy. Some of our friends live in multiple countries, and through their experiences, we recognize the importance of cherishing the place we call home. We strive to instill this gratitude within our children, ensuring that they too will inherit a deep appreciation for the opportunities bestowed upon them.
Now, let us shift gears from the jubilant festivities to the captivating realm of finance, where we shall embark on an exploration of how the latest events and trends intertwine with potential financial opportunities!
Recent Trade Review
In our endeavor to identify profitable opportunities, our Profit Accelerator Trader services directed our attention toward Costco Wholesale ($COST) stock. Utilizing our proprietary PAT model, we recognized the potential for gains in this particular trade. To maximize returns, we employed a strategy of selling out-of-the-money call options against the stock, capitalizing on the heightened implied volatility in the market.
By holding the position for a couple of weeks, we aimed to generate additional income through the collection of premium. The strategy involved selling call options with strike prices above the current trading price of the stock. This enabled us to benefit from time decay and the gradual erosion of extrinsic value, allowing us to capture a return ranging from 0.5% to 1% by simply holding the position overnight.
It's worth noting that we focused on liquid stocks with weekly options available. This ensured sufficient trading volume and flexibility in managing our positions. Notably, approximately half of the options volume consisted of weekly options and options with zero days to expiration (0 DTE). This increased liquidity and provided opportunities for timely adjustments or potential exit strategies.
In this specific trade, we implemented a covered call strategy. A covered call involves owning the underlying stock while simultaneously selling call options against it. This approach allows us to potentially benefit from the stock's appreciation while collecting premiums from the call options sold. The strategy acts as a risk management tool, as the premium received can help offset any potential downside risk.
One of the advantages of our paid services compared to the free offerings is the ability to receive SMS messages. These timely notifications alert traders when to enter or exit positions, ensuring swift execution and capitalizing on profitable opportunities. This feature provides a valuable advantage, enabling traders to stay informed and take decisive actions in real time.
At our core, we are committed to delivering comprehensive services that guide traders toward successful outcomes. Our recent trade involving Costco Wholesale exemplifies our approach of identifying viable opportunities, implementing proven strategies such as covered calls, and providing crucial timely alerts for optimal trade execution.
CURRENT TRADING LANDSCAPE
As the first trading week of Q3 came to a close, U.S. markets managed to end on a positive note despite a slightly lower opening on Friday, primarily driven by the reaction to the slowdown in jobs growth during June. The S&P 500, for example, after experiencing a dip on Thursday, managed to hold onto its gains on Friday, thanks to an afternoon rally that dissected the impact of the cooling jobs growth in June. As a result, traders have slightly lowered their expectations of a 50 basis point interest rate hike by the Federal Reserve in the coming months.
Looking ahead, caution prevails among investors due to concerns about an overbought market and the possibility of retesting recent levels. The SPY is currently trading between 445 and 447, with the August high acting as a critical threshold to sustain the bullish trend. However, a dip below 432 might trigger a quick retest of previous levels. Market analysts maintain a bearish outlook for the second half of the year, with the upcoming Q2 earnings season playing a pivotal role in shaping market direction as results are compared to the previous quarter. See $SPY Seasonal Chart:
Going back to Monday, we started the week on a positive note as all three major U.S. indices closed in positive territory ahead of the Independence Day holiday, which led to market closures on Tuesday. An early-in-the-week economic release showed the manufacturing sector's performance garnered attention as the Institute for Supply Management's purchasing managers' index revealed a contraction in June, falling short of economists expectations. This prompted the Dow Jones Industrial Average to experience a slight decline, the S&P 500 remained relatively flat, and the Nasdaq Composite recorded modest gains.
With the holiday-shortened week and market closures in the U.S., some focus shifted to European and Asian markets. European stocks mostly edged higher despite data indicating a decline in eurozone manufacturing activity. However, AstraZeneca, a London-listed pharmaceutical giant, faced a decline in its stock price due to disappointing results from a lung cancer treatment study. In Asia, equities enjoyed gains, particularly Chinese electric-vehicle manufacturers that reported record monthly deliveries. Although Chinese manufacturing growth showed signs of slowing down, Hong Kong's market led the region with its upward trajectory.
Thursday witnessed a decline in stock prices as the latest economic data indicated a thriving labor market. Bond yields, however, rallied in response. It is becoming increasingly evident that the Federal Reserve's battle with inflation is far from over, leading traders to speculate on a potential interest rate hike during the upcoming Federal Open Market Committee meeting scheduled for July 25-26.
Despite a decline in job openings, the labor market remains robust, as reflected in the Job Openings and Labor Turnover Survey. Hires and total separations remained relatively stable, with a notable increase in quits while layoffs and discharges experienced minimal change. Private-sector job growth surged in June, surpassing expectations, while jobless claims saw a slight increase in the latest week.
With the Federal Reserve closely monitoring the labor market, investors anticipate a cooling effect as wage growth continues to impact inflation. The possibility of the Fed resuming interest rate hikes in July gains support from strong private-sector job data. Market sentiment remains cautious as the market trades sideways, and volatility is expected to increase in the second half of the year. Investors are advised to review unemployment data, services PMI, and the Federal Reserve's June meeting notes for insights into the central bank's hawkish stance. Value stocks have seen a rotation, while technology stocks have slowed down, indicating the market's overbought condition. However, the possibility of further gains remains, particularly in value stocks.
As we await the start of the earnings season next week, Europe, China, small caps, regional banks, and cyclicals have begun to pull back, while the uptrend in technology stocks remains intact. With no earnings scheduled for this week, all eyes are on the upcoming earnings reports, which will play a crucial role in shaping market sentiment and direction.
How I Was Able to Grab 62.38% From A $JPM Trade One Year Ago With My FREE“12-Month Income Calendar”
Volatility? Inflation? Recession? Uncertainty? Not a problem.
Embracing a greener and more sustainable future, a certain sector is captivating investors' attention with its innovative solutions and potential for growth. Companies within this sector are revolutionizing transportation and redefining industry standards. In particular, one standout player has been making waves with its commitment to cutting-edge technology and environmental responsibility. With notable investments and a visionary founder at the helm, this company is poised to reshape the landscape of an entire industry.
Powerful $EVXX To Surge:
Defiance Pure Electric Vehicle ETF (EVXX) embodies a dynamic presence within the electric vehicle (EV) industry, actively adding companies that contribute to the advancement of sustainable transportation. Operating as an ETF, EVXX not only holds companies that drive innovation but also plays a pivotal role in shaping the future of Electric Vehicles. By adding companies that offer cutting-edge technology and progressive strategies in this field, EVXX stands at the forefront of the electric vehicle revolution within the ETF space.
As an ETF dedicated to sustainable mobility, EVXX focuses on identifying and investing in companies that are spearheading the electric vehicle movement. By doing so, it aims to revolutionize transportation and combat carbon emissions with its pioneering electric vehicle offerings. EVXX, as a trailblazer in the EV market, is committed to excellence and envisions a greener future.
Reviewing EVXX’s current levels and utilizing our A.I. models, I am seeing an uptick for the sector and if so there is one specific symbol I believe offers us a great opportunity to profit from.
TRADE OF THE WEEK - $RIVN is the Tesla of the Electric Pickup Truck
In the ever-growing landscape of electric vehicles (EVs), one standout company capturing the attention of industry experts and investors alike is Rivian Automotive Inc. (RIVN). Established in 2009 by visionary entrepreneur Robert "RJ" Scaringe, Rivian has made significant strides in the development and production of electric adventure vehicles that are reshaping the automotive industry.
At the forefront of Rivian's innovative lineup is the R1T, an electric pickup truck designed to revolutionize off-road capabilities while prioritizing sustainability. With its sleek design, impressive range, and remarkable performance, the R1T has captured the imagination of adventure enthusiasts and environmentally conscious drivers alike. Complementing the R1T is Rivian's SUV offering, the R1S, which combines luxury, utility, and electric power to provide a seamless driving experience.