Trade Ideas: June Week 1 Index Analysis!

Hello,

Welcome to this edition of Trade Ideas, which previews events, and index levels, to watch during the upcoming week. Wall Street will be zeroed in on the May jobs report this week, which hits Friday. The update on nonfarm payrolls will be the last one before the Federal Reserve meets on June 11-12, amid growing uncertainty on the timing of rate cuts. The April PCE inflation report released Friday showed the Fed’s official target, the 12-month Core PCE, came in at 2.8%, steady from March’s reading. Things are a little bit different across the Atlantic, where the European Central Bank is expected to cut on June 6. June 6 is also the 80th anniversary of D-Day.

Investors will also be watching Nvidia (NVDA) just ahead of the 10-for-1 stock split that becomes effective after the close on Friday.

Volatility watch: Options trading volume has moved higher on Robinhood Markets (HOOD), Global Ship Lease (GSL), UL Solutions (ULS), Danaos (DAC), Leggett & Platt (LEG), DLocal (DLO), and Coursera (COUR).

After a five-week winning streak, the S&P 500 (SP500) experienced its first weekly decline on Friday, concluding a holiday-shortened week and an eventful May. In last week’s SPY Scenario, we highlighted the midterm support test of $521.84. Not only did we test those support levels, but we also broke below to test $518 levels before rebounding sharply in the latter half of Friday’s trading, leading to substantial options gains from our strangle alerts. As we enter the new month and approach the Federal Reserve meeting in two weeks, we anticipate increased volatility. Next week, we expect significant market movements following Friday’s actions.

Bullish Scenario: If SPY breaks above $530.42, consider going long with stops at $528.25 and targets above $533.07.

Bearish Scenario: If SPY falls below support at $526.91, consider going short with targets at $525.00 and lower. A break below $524.35 could see SPY retest the midterm support around $521.28, a level tested last week. If this level fails, we may see a retest of $518.36 to $516.64 (50-day MA) support.

CHWY & HPQ EARNINGS PLAY: CHWY and HPQ Earnings strangles worked as we planned going into each’s earnings. Both sets of Alerts Returned an Average of over 200%. We had 4 trade Alerts in total for both trades and each returned.

XLK Index addition to Index alerts: We have expanded our Index Alerts to include more indexes, providing our subscribers with even more opportunities. Our first XLK spread alert performed exceptionally well, generating gains of over 350% despite the short trading week. This success underscores our system’s ability to identify lucrative trade opportunities across the market.

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