Tariffs are Back on the Menu
Premium Section: Costco (COST) & Walmart (WMT) Setups
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After a strong Independence Day rally, the market has shifted its focus back to the Trump Tariffs. President Trump is sending letters to key trading partners in an effort to secure trade deals. Treasury Secretary Bessent stated that countries failing to reach agreements by August 1st will face the full Liberation Day tariffs announced in April. We may now be back in a headline-driven market.
The S&P 500 (SPY) continues to trend higher, holding above all major moving averages—confirming the uptrend. However, the Stochastics and RSI now show short-term overbought conditions. A bearish MACD crossover would confirm downside momentum. Today’s Cumulative Volume Delta (CVD) suggests traders bought the dip, but if the index rolls over, those same participants could be forced to sell. Look to buy a pullback to the 10 EMA around $615 or the 21 EMA near $607. The Volume Profile Point of Control sits at $590 and should provide strong support as well.
The Smart Money is selling, waiting for a dip to buy. Dumb Money is piling in at overbought levels. If Dumb Money sells out, this could take the market lower…
…especially when the market is in a state of extreme greed.
The NYSE Advance/Decline Line ($NYAD) appears overbought as well as it is heading lower after pushing the Upper Bollinger Band. The RSI is also in the overbought area.
The Nasdaq 100 Stocks Above the 20 SMA is also heading lower after touching the overbought region (the 80 mark).
The Nasdaq 100 Stocks Above the 5 SMA also shows overbought selling. Taken together, these three breadth indicators suggest that adding new equity positions now offers poor risk-reward. Waiting for a deeper pullback would be the wiser move.
In conclusion, be mindful of a shift back to a headline-driven market and look to buy dips to key support areas as the market works off overbought conditions.
In the Premium Section we’ll go over setups in Costco (COST) and Walmart (WMT).
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