Floating Free
U.S. indices are back flirting with record highs, lifted by corporate earnings that jumped 28.6% year-over-year in Q1.
Without that elusive U.S.-Iran peace deal (promised a thousand times, still not here), the rally once again rides on semiconductor and aerospace speculation. Valuations in these sectors have gone orbital.
Two events could bring this party crashing back to earth.
First, that long-awaited peace agreement between America and Iran could finally materialize, triggering classic “sell the news” profit-taking.
Second, SpaceX’s IPO on June 12 might expose just how greedy investors have become. The dream of space conquest could slam into earthly realities like helium supply chains, already squeezed by the Strait of Hormuz closure.
My trading plan
Dow futures look set to start the week on the front foot again. But just like last Monday, the index got blocked just shy of its key target (monthly R1 resistance last week, weekly R1 this time).
Sure, sellers haven’t taken full control yet. But buyers are clearly losing steam, with rallies stalling before reaching their objectives.
Meanwhile, bearish corrections are finding support at increasingly obvious levels. Look at last week’s double bottom, which now coincides with the new monthly pivot at 50,436 points.
Given this setup, I’m favoring short trades, targeting buyer stop-losses below the 50,386 support level.
Happy trading!
Maxime holds two master’s degrees from the SKEMA Business School and FFBC. As founder and editor-in-chief of NewTrading.fr, he writes daily about financial trading.
Wing and a Prayer
Plot twist
History repeats