Based on what I see internally, I’m not feeling the current sell-off pressure. Treasury yields rose on Tuesday and caused a downshift in stocks. But if the gross domestic product misses analysts’ expectations on Thursday, stocks could bounce back because the Federal Reserve may hold off ending its bond-buying program.
That’s why I picked out a long play in one of the strongest stocks, and a short play in one of the weakest to trade this market — and more in Wednesday’s stock market recap.
Stock Market Recap
In Wednesday’s stock market recap, stocks are mixed as Chinese debt issues improve and supply disruptions get worse while U.S. futures are on the rise.
We’re experiencing the biggest sell-off since May in blue chips, and April for tech stocks. When we look at the current put/call ratio, we see the second most bearish activity since April. This trend tends to reverse at these levels. Momentum levels are low, limiting stocks’ downside. So we might see stocks recover in the short term.
The delta variant and supply chain disruptions have continued to slow economic recoveries around the world. Thursday’s gross domestic product data could reflect this further and would figure into the Federal Reserve’s timeline of bond tapering and raising interest rates. A strong GDP would drive the bond market lower while a weak one would likely drive it higher. The opposite could occur for interest rates.
Roger’s Radar: 1 Long and 1 Short Trade For This Week
DexCom (Nasdaq: DXCM) is a medical device company involved in diabetes management. DXCM is the sixth strongest stock in the S&P 500 and will be one of the first to rise if the market bounces back. It pulled back to its 50-day moving average and will look to continue its three-month upward trend.
The second stock on my radar is one of the weakest in the S&P 500. It actually traded higher the past week as the market dropped, but has continued on its three-month downtrend. This could be a good time to short the stock.
In this video, you’ll discover if stocks are oversold… why the market sold off… whether bonds will drop or rise… what to expect from Thursday’s GDP report… and the hottest long signal and coolest short trade.
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