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.
The Market Landscape: A Deeper Dive into Wednesday, July 23rd
This week’s Breakfast Club session, led by John Hutchinson and Jeff Wood of Traders Reserve, provided a comprehensive look at the market’s current state. We dissected significant earnings reports, analyzed global trade developments, and explored effective strategies for identifying potential trades amidst a complex economic backdrop. The overarching theme? While indices show continued ascent, a deeper look reveals subtle shifts and opportunities that demand attention.
Big Tech Earnings & The Nuance of Reaction
The Q2 earnings season is officially underway, and the initial reactions are proving that not all beats are created equal.
Texas Instruments (TI), often seen as a bellwether for the semiconductor industry, reported what could be described as “OK” earnings. However, the market’s verdict was swift and decisive: a surprising 10% drop in pre-market trading. The culprit wasn’t an earnings miss, but rather revenue falling below analyst expectations. This immediate, sharp decline for a fundamentally sound company highlights the market’s heightened sensitivity to guidance and even slight revenue discrepancies in a high-valuation environment. For traders, TI’s performance offers a critical barometer for the broader chip sector and emphasizes the need to scrutinize all aspects of an earnings report, not just the headline EPS number.
Conversely, broad market futures are signaling higher opens, with the S&P 500 looking to add between 0.25% and 0.5% at the open, extending its remarkable rally since late April. The NASDAQ, while showing some pre-market weakness, is poised for potential “juice” from Google’s highly anticipated earnings report after the market close today. This divergence underscores the selective nature of the current market rally, where some major players continue to lead, while others face immediate scrutiny.
Keep a close watch on Google’s after-hours performance. Its reaction will likely set the tone for the tech sector and potentially the broader NASDAQ in the coming days.
Global Trade Deals: A New Chapter or Just a Pause
Overnight news brought a significant and largely positive development: a trade deal announced with Japan. This agreement, which includes a 15% tariff on goods like automobiles, represents a substantial reduction from previously expected levels. The immediate market reaction was palpable, with the Nikkei up 4% overnight and Japanese automakers like Honda Motor and Toyota both gaining roughly 4% in U.S. pre-market trading.
This deal, coupled with similar agreements with the Philippines and an anticipated deal with Indonesia, is clearly contributing to the overall pre-market strength across global indices. It signals a continued effort to de-escalate trade tensions, which could provide a more stable environment for international businesses and supply chains. While the long-term implications are yet to fully unfold, the immediate sentiment is one of cautious optimism, hinting at a “settlement, so to speak, in the tariff approach.”
Beyond the Indices: Individual Stock Opportunities
While macro events drive headlines, granular stock analysis reveals actionable opportunities.
Amphenol (APH) stands out as a strong performer, expected to open up 6% after reporting robust earnings before the market opened. This tech company has been on a “pretty strong run” since April, and its “strong performance week, month, quarter, year-to-date” is notable. The stock has successfully broken out of a long-term trading range, making it a compelling candidate for your watchlist, though its options are monthly.
Sezzle (SEZL), a stock we’ve discussed previously, delivered on its anticipated pullback. Despite breaching the suggested $140 level, it remains attractive. With “rapidly growing sales” and “rapidly growing earnings,” its forward P/E of 30 is still considered “cheap by comparison in the financial and credit services realm.” Crucially, the recent consolidation did not violate its 50-day moving average, maintaining its bullish posture. While open interest and volume are lower, making it less suitable for our services, it’s an excellent idea for individual traders seeking opportunities.
GE Vernova (GEV) continues its impressive trajectory, reporting positive earnings and climbing nearly 7% this morning. Having traded at $180 last year and now approaching $500, its “huge performance” is undeniable. Despite operating in the challenging U.S. alternative energy space, its “international backlog” is a key driver for long-term growth. GEV’s offering of weekly options provides greater flexibility for premium collection, even with its higher price point.
Lastly, Arista Networks (AET), an “old favorite,” is building a strong trend. While it hasn’t retested its February high of $130, its channel is positive with the 50-day moving average above the 200-day. With “rising earnings, rising sales,” and a surprisingly “cheap” forward P/E of 37 (even 47) for a tech stock, Arista remains an “excellent value for trading, for owning, for using in your options trading.” It also offers weekly options with consistent open interest.
Identifying Opportunities: Strategic Scans & Market Wisdom
Jeff shared invaluable insights into identifying trade opportunities using simple yet powerful scans:
- “What’s Trading Higher?” Scan: This basic scan identifies stocks that have risen over the last 5 days (filtered by price $5+ and sufficient volume). It’s a fantastic way to spot emerging industries or individual outperformers. Examples like Kohl’s (up 54% in 5 days!) and “robo-taxi” companies like Archer Aviation and Joby Aviation underscore the power of this broad market sweep. This scan revealed that some lower-priced stocks often overlooked for premium options can still offer significant capital appreciation.
- S&P 500 Sector Scan: By applying the “What’s Trading Higher?” logic solely to the S&P 500, Jeff demonstrated how to observe sector rotation. Over the last 5 days, the scan clearly indicated an increase in finance, basic materials, and industrials, reinforcing the ongoing shift in market leadership we’ve been tracking.
- Exponential Moving Average (EMA) Stack Scan: For momentum traders, Jeff outlined a specific Thinkorswim scan: 21-period EMA above 50, and 50 above 200, with implied volatility (IV) percentile between 30 and 84 (excluding earnings within 20 bars). This “momentum stack” identifies stocks like Oracle (ORCL), which recently pulled back for 3 days after a strong uptrend but still maintained high IV. This type of setup allows for strategic options plays, such as a bull put spread (e.g., 230/225 spread for $1.45 on a 5-wide spread) when a stock has experienced a healthy pullback within a strong uptrend.
The Underlying Message: While the market is at “all-time highs” and some fear of a sell-off is natural, John emphasized that “the market can always keep moving higher,” especially with fundamental justifications. The bond market’s continued move lower, for instance, could increase the equity risk premium, drawing more capital into stocks. There are still “excellent values” out there.
Looking Ahead: Key Economic Data & Events
Beyond specific stocks and scans, the broader economic calendar holds upcoming market movers:
- Today (July 23rd): Existing Home Sales at 10:00 AM ET. Traders of zero DTE options should be aware of potential volatility around this time.
- Tomorrow (July 24th): Unemployment Claims pre-market (currently at 229k, within “normal-ish range”), and Flash Manufacturing/Flash Services data just after market open. Again, futures and zero DTE traders should note these timings.
The Traders Reserve team is staying busy. Millionaires Trading Club had “3 or 4 trades close in a row” shortly after Monday’s Breakfast Club, marking a “pretty busy week already” with an objective for “faster, more aggressive income acceleration.”
Join Us for Deeper Insights and Live Trading
Want to learn more about how we identify these opportunities and manage our trades?
- Attend our special Happy Hour Webinar this Thursday, July 24th, at 4 PM ET on Zoom. We’ll be focusing on managing emotions in the present market environment and sharing details about our upcoming Millionaires Trading Club live event in October, along with other forward-looking ideas and a return of something special to Traders Reserve members.
- Millionaires Trading Club (MTC) meets today at 11:00 AM ET.
- Income Masters meets today at 12:30 PM ET.
- Tune in for our next Breakfast Club session with Jeff and John next Monday, July 28th, at 8:30 AM ET.
