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.
Markets React to Consumer Spending and Savings Data
Last week’s PCE report offered a mixed picture of the U.S. consumer. Spending picked up, while personal savings as a percentage of disposable income continued to fall. The consumer may be resilient, but this pattern suggests sticky inflation is still embedded in services spending — transportation, food, financial, and recreation — which is harder for the Fed to tame.
The Real Risk of a Shutdown
The government shutdown risk on October 1st carries more weight than usual. If it happens, Friday’s jobs report won’t be released, leaving the Fed without critical data. No data could mean hesitation on further rate cuts, which risks stalling the rally.
Volatility is likely to rise around Oct 1st and Oct 3rd when traders react.
EA Trade Idea Pays Off
Last week’s setup in Electronic Arts (EA) — an Oct 24 $175/$180 call spread — was based on seasonality and momentum. The stock then jumped to $193 after reports that Saudi Arabia’s Public Investment Fund may take the company private.
That’s the kind of one-week move that hands you the chance to lock in real profits quickly. Personally, I’m taking money off here — buyout rumors can cap the upside, and if talks fall apart, so does the stock.
Energy and Utilities Take the Lead
The equal-weight S&P (ticker: RSP) is basically flat for the month, but rotation tells a different story.
- Energy: up more than 5% last week, with 91% of stocks above the 20-day MA.
- Utilities: 87% above their 20-day MA.
- Consumer Staples: lagging badly, only 30% above the 20-day.
Energy and utilities may still have room, but they’re starting to feel stretched. If you got into the XLE call spread we talked about last week, you’re already sitting on nice gains.
Breadth Check: Not Quite There Yet
Friday felt strong — 75% of stocks advanced. But under the surface, there were still more new 5-day lows than highs. That tells me breadth still isn’t confirming a big bullish breakout yet.
And notice something else: the Mag 7 names (except Tesla) didn’t show up in the top gainers. That’s not bad — it means leadership is broadening out. But I’d like to see more consistency in breadth before I load up on aggressive bullish trades.
What I’m Watching Next
Heading into October, here’s what’s on my radar:
- Shutdown risk delaying data and Fed decisions
- Energy and utilities leading, but possibly stretched
- Breadth signals — waiting for more net highs than lows
- Volatility spikes around Oct 1st and 3rd
We’ll see if this consolidation breaks higher or lower. For now, I’m staying nimble and watching breadth closely.
We’ll be back Wednesday morning at 8:30 AM EST on “Breakfast Club Live” with more market insights. But don’t wait. Watch the full video now to see the strategy in action.
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