Welcome to the Breakfast Club, your weekly dose of market insights and trading strategies! Join us live every Monday and Wednesday at 8:30 AM ET on Traders Reserve Live, where our experts break down the latest market movements, share actionable trade ideas, and answer your most pressing questions.
Navigating Today’s Market: Beyond the Headlines
Are you making the most of today’s dynamic market?
The stock market’s on a run, hitting new highs. Crazy, right? But here’s the truth: for those who know the game, this market isn’t scary—it’s a goldmine. At Traders Reserve, we’re dedicated to cutting through the noise. This isn’t just theory; this weekly report, pulled straight from our “Breakfast Club Live” session with Jeff Wood, shows you precisely how our Millionaires Trading Club members are grabbing serious cash.
The Midweek Market Mashup: What You Missed (and What’s Ahead)
What an exciting week it’s been! While major indices saw a dip yesterday, futures are looking positive this morning, bouncing back nicely. But let’s dig a little deeper than just the daily ups and downs.
We saw some notable declines, particularly with companies like UPS, BRO, and even Novo Nordisk (NVO), the maker of those popular weight-loss drugs. Why the tumble? Much of it boils down to earnings and forward guidance, with NVO specifically facing talk of knock-off products and stiffer competition. It’s a vivid reminder of how quickly market sentiment can shift based on company-specific news.
The Fed, Earnings, and Economic Jitters
Today is a big day for market watchers! The Fed is speaking later, and while they’re widely expected to keep rates unchanged (in that familiar 4.25% to 4.5% range), the real fireworks will be during the press conference afterward. That’s when we’ll get a peek into Chairman Powell’s thoughts on September rate cuts. The pressure is mounting for a cut, especially with the Fed itself having eyed two rate cuts by year-end – and time is ticking!
Pro Tip for Zero-DTE Traders: If you’re playing those ultra-short-term options, be acutely aware of the 2:00 PM ET volatility around the Fed announcement. It could be your friend or your foe, depending on your strategy!
Earnings season rolls on with two of the “Magnificent Seven,” Microsoft and Meta, reporting today. S&P 500 companies are generally expected to show growth in Q2 earnings compared to last year. Why the good news? Many companies “sandbagged” their guidance when tariff uncertainties loomed. Now, they’re looking like heroes as they beat those lowered expectations. Consumers are still spending, and jobs are shifting positively, keeping the economy on relatively stable ground.
However, a word of caution: the full impact of recent tariff changes could still be unfolding, with potential legal battles ahead that could shake things up. And while AI continues to prop up the market, keep an eye on the growing divide between the “old” and “new” economies. It’s a truly “weird spot,” as Jeff puts it.
Decoding the Economic Calendar
This morning brought us the ADP employment report forecast (positive!) and GDP quarter-over-quarter growth (also positive!). We’re looking at a mixed bag of economic signals, meaning there’s little here to fundamentally change the macro narrative. While yesterday’s job openings report showed a slight dip, it’s just one data point. As Jeff wisely notes, “There’s so many other things to worry about in life.”
Looking ahead, tomorrow brings the PCE index pre-market, and Friday will deliver more non-farm employment change numbers and an unemployment rate estimate (a slight tick up from 4.1% to 4.2%). Friday’s jobs report is likely to have a greater market impact than anything we’ll see today or yesterday on the employment front.
Trend Spotting with Heikin-Ashi Candlesticks
At Traders Reserve, we often use Heikin-Ashi candlesticks to cut through the market noise and spot trends more easily. They’re fantastic for identifying pivot points and ongoing market direction.
S&P 500 (SPX): The S&P 500 has been on a strong upward trend with mostly green Heikin-Ashi bars since late June. Even yesterday’s down day was still represented by a green bar, indicating the underlying trend remains positive. The only slight caution? A lower wick on yesterday’s SPX bar, which can sometimes signal indecision, but could be quickly resolved if Microsoft or Meta deliver blowout earnings.
Nasdaq (QQQ): The Nasdaq (Q) is also showing strong upward momentum with continued green bars and new all-time highs. A brief yellow bar earlier in July indicated some indecision, but it quickly resumed its upward march.
Russell 2000 (RUT): The Russell 2000, representing smaller cap stocks, shows more indecision. We’ve seen a “Christmas tree” of red, green, and yellow bars, indicating some exhaustion or uncertainty. It may need the broader market, particularly the larger tech names, to help lift it higher.
Dow Jones Industrial Average (DIA): The DIA recently flipped to a red Heikin-Ashi candle after hitting a consistent resistance line. While it’s still above its green cloud trend and 20-day moving average, this red candle signals an extra layer of caution.
Seasonal Shifts: Remember, August often brings negative seasonality after the big tech earnings in July. If these seasonal trends hold, we might see more red Heikin-Ashi candles and some market pullbacks.
Don’t Panic! Even if the overall market shows signs of weakness, there are always bullish trades to be made through sector rotation. It might be more challenging, but opportunities still exist. For those with larger portfolios, this could be a time to consider hedges or taking some profits off the table. (And just a friendly reminder: Jeff isn’t a registered financial advisor – these are just observations and personal strategies!)
Case Study: Trading Microsoft Earnings
Let’s dive into some hypothetical trade ideas for Microsoft (MSFT) earnings, just for fun and education!
Historically, the average one-day move after Microsoft earnings is about +/- 4.61%. However, “average” can be tricky because outliers (like last quarter’s nearly 8% gain!) can skew the numbers. The expected move for today’s post-market action is 3.5%.
Interestingly, the one-day move after Microsoft earnings is only positive 45% of the time. So, it’s pretty much a coin flip in terms of immediate direction!
Here are a couple of strategies Jeff explored:
- Iron Condor (based on average move): Setting up a 5-wide iron condor around the +/- 4.6% range (e.g., 490 to 537) yields a potential max profit of $179 for a risk of $321. You get a lot of room for error, but volatility crush after earnings means less credit collected.
- Iron Condor (based on expected move): Tightening the iron condor to the 3.5% expected move (which Jeff modeled out) could bring in more credit ($3.35) for less risk ($165). This offers a much better risk-to-reward ratio, provided the move isn’t an extreme outlier.
- Buying a Debit Spread (Call Side): If you’re bullish on Microsoft’s AI story and expect another killer quarter, buying an at-the-money call debit spread could cost you $110 with the potential to make $140. This is attractive with a better than 1:1 risk-to-reward on essentially a coin-flip outcome.
- Buying a Straddle/Strangle (Caution!): While buying both a call and a put might seem like a good idea if you expect a huge move in any direction, be very careful! Implied volatility is already high, and a “volatility crush” post-earnings can significantly eat into your profits unless you get an absolutely massive, outlier move far beyond expectations.
Jeff is personally leaning towards an iron condor strategy for Microsoft, depending on market prices when the bell rings.
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We’ll be back Monday morning at 8:30 AM EST on “Breakfast Club Live” with more market insights. But don’t wait.
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