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This week, markets traded back and forth on mixed signals from the Fed as well as unique results in the latest retail reports. On Thursday, the closing price of U.S. equities rose in the last hour of trading after they fell on Wednesday following the release of the latest Federal Open Market Committee meeting minutes. While initially causing shares to sell off, markets were able to cut losses on Wednesday and Thursday as investors considered the mixed messages the Fed provided.
At the July Federal Reserve meeting, policymakers noted that they would be open to continuing interest rate hikes, but stressed the importance of not increasing rates too quickly. In the minutes, policymakers also stated that if the public began to doubt the Fed’s commitment to raising rates enough to curb inflation, there would be a significant risk of sustained high inflation.
And remember we’re not talking about day-trading here. I’m looking for 50-100% gains inside the next 3 months, so my weekly updates are timely enough for you to act.
On the economic release front, this week’s release of retail data shows that despite remaining flat in overall sales, the U.S. retail sector still advanced when removing auto and gas. Leading up to the release, estimates were in the range of 0.1% growth. When removing auto, sales increased by 0.4% and rose by 0.7% if gasoline was also ignored. Q2 Earnings from Walmart and Home Depot helped shares rise while Target saw shares drop after missing estimates. Lowe’s released their earnings as well and saw shares marginally increase.
Globally, European markets rose on Thursday after trading primarily lower throughout the week following a key inflation report. In July, annual core price inflation in the Eurozone climbed to an all-time high of 8.9 %, according to an EU statistics report released on Thursday. According to Eurostat, the EU’s statistics office, prices for goods and services bought by consumers climbed 0.1% from June to July in the 19 countries that use the euro. The EU’s statistics office also confirmed that the fundamental measure, which excludes especially volatile components and is important for monetary policy, had significantly increased.
Taking this into account, let’s review the latest market conditions. The U.S. Dollar Index rose throughout the week while gold sold off on Thursday. After seeing a slight bump on Wednesday, long-term U.S. Treasury yields declined on Thursday. Going into Friday, the SPY is on track to close the week with modest gains.
QQQ sold off significantly on Wednesday as well but is appearing on track to finish with slight gains heading into Friday. The Volatility Index dropped off on Thursday, trading near $19 after opening the week in the $20 range.
With the July retail numbers behind us, the next key report to impact the market could be the real Q2 GDP, revision and income, which will release next week on Thursday. Also releasing next week are manufacturing and services PMI as well as July home sales.
We are watching the overhead resistance levels in the SPY, which are presently at $430 and then $440. The $SPY support is at $420 and then $406. Having reviewed the latest trends in the market, we expect the market to continue the short-term rally for the next couple of weeks. However, we would be a seller into any further rallies and encourages readers not to chase the market.
Looking at these levels, we believe the market remains overbought. The rally will likely continue to some extent for the next few weeks but after retail sales came in slightly weaker than expected and the market sold off it is our belief the best part of the rally is behind us.
The market has been top building for the last few weeks and could sell off as soon as the end of this month or the beginning of September. We believe the bear market could resume its downward momentum in September.
After reviewing the current market conditions alongside my A.I. toolset, I am looking at one symbol which could have an outstanding outcome following this latest earnings season. Not only is this symbol backed by the most current trends, but I also see a number of indicators pointing to it utilizing historical performance.
As the market is currently overbought, I am looking into long-term treasuries as a solid option for this time. Specifically, the leading ETF in this field.
iShares 20+ Year Treasury Bond ETF (TLT) offers exposure to an index composed of U.S. Treasury bonds with remaining maturities of over 20 years and is a great buy at this time.
As the retail sales and the reaction thereafter indicated, the best part of the rally is behind us. Earnings are also predominantly behind us. This makes the Treasury ETF a unique opportunity following the latest comments from the Fed which could support this symbol.
Reviewing the $TLT Seasonal Chart, we see that there is a sizable gap between the annual season price, marked in green, and the current year price, marked in blue. Similarly, when comparing the Seasonal Chart results to those of the 10-day forecast from the Stock Forecast Toolbox, we see that there is an opportunity in the next 20-30 days. While seasonal charts are displaying red signals, though slightly weak in the 30-day range, our Stock Forecast Toolbox is indicating a positive trend.
This symbol is trading near its 52-week range low while also trading near our forecast projected high levels. As the market rally could be coming to an end, this symbol offers a solid space during volatility. The gap seen in the Seasonal Chart annual and seasonal price shows an opportunity for growth while the near-term prediction is signaling the easiest way for the ETF is up.
This is what the power of AI can do for us, as well as for members of our RoboInvestor stock and ETF advisory service. Our proprietary AI platform identifies trades with a high probability of profits and cuts out all the noise and emotion that typically drives investor behavior. We email subscribers an online newsletter every other week, over the weekend, that includes my fundamental commentary on the market landscape, a technical read on near-term market direction, an update on current positions, and one or two new recommendations to act on when the market opens Monday.
RoboInvesetor is an unrestricted investment service, in that I may recommend blue-chip stocks or ETFs that represent the major indexes, market sectors, sub-sectors, commodities, currencies, interest rates, volatility, and shorting opportunities through the use of inverse ETFs. Our model portfolio will hold between 12 and 25 positions, depending on market conditions. Lately, we’ve been entirely more cautious with a smaller number of stocks and ETFs.
Our track record is one of the very best in the retail advisory industry, where our Winning Trades Percentage is at 88.74% going back to April 2018.
The market continues to shape up to be as unpredictable as I’ve seen since the pandemic broke out in early 2020 – and we still have more than 3 months to go! Inflation, Fed decisions, geopolitical tension, and the Ukraine war – all factor into how money is being made and lost. Don’t go at it alone in this investing landscape, but instead, put RoboInvestor to work today and add a big layer of confidence to your portfolio going into tomorrow. We’ll be with you every step of the way!
And remember we’re not talking about day-trading here. I’m looking for 50-100% gains inside the next 3 months, so my weekly updates are timely enough for you to act.
*Please note: RoboStreet is part of your free subscription service. It is not included in any paid Tradespoon subscription service. Vlad Karpel only trades his own personal money in paid subscription services. If you are a paid subscriber, please review your Premium Member Picks, ActiveTrader, MonthlyTrader, or RoboInvestor recommendations. If you are interested in receiving Vlad’s personal picks, please click here.
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