Forgotten Profits Trade Setup Archive
Below you'll find Ian's setups stacked up and ordered chronologically. As this service once resided at another home, the alerts only go back to mid July. For a full track record, see the portfolio.AI Jobs Impact
AI Jobs Impact: What Yale and Brookings Say About Generative AI’s Effect on Employment
A new study from Yale University’s Budget Lab and the Brookings Institution finds that the AI jobs impact has been modest so far.
Despite dire predictions from tech CEOs, ChatGPT’s mass adoption hasn’t triggered sweeping layoffs or a collapse in entry-level work.
For traders, the real story may be in the gap between perception and data.
Key research findings
- No evidence of large-scale job losses tied directly to generative AI since 2022.
- The occupational mix has shifted slightly for tech workers, but the economy-wide effects mirror past tech waves, such as those driven by PCs and the internet.
- Unemployment among college graduates aged 20–24 spiked to 9.3% in August, but researchers say AI does not drive this.
- “We are not in an economy-wide jobs apocalypse right now,” Brookings’ Molly Kinder said.
Why this matters
CEOs, including Anthropic’s Dario Amodei and OpenAI’s Sam Altman, have warned of mass elimination of roles in law, consulting, finance, and customer service.
Yet empirical evidence doesn’t support those claims — at least not yet.
Economists argue that hype around AI is pushing companies to invest in infrastructure rather than delivering productivity shocks.
As MIT’s Daron Acemoglu points out, AI firms have incentives to exaggerate disruption to justify larger cloud and hardware investments.
That narrative has fueled stock rallies in AI hardware providers like Nvidia, even as the AI jobs impact remains muted.
Market and trading implications
| Theme | Implication | Trading Angle |
|---|---|---|
| Labor Market Stability | AI not triggering mass layoffs yet; Fed less pressured by “tech unemployment.” | Bullish for equities near-term; SPX can hold valuations if jobs remain intact. |
| AI Hype vs. Reality | Disconnect between CEO warnings and data could fuel volatility on AI stock pullbacks. | Fade rallies in AI-linked names (NVDA, MSFT, AI ETFs) if macro weakens. |
| Long-Term Adoption | Gradual, not sudden, reshaping of job categories. Productivity gains still possible in 2–5 years. | Swing trade setups: accumulate dips in AI infrastructure leaders, avoid chasing highs. |
| Sentiment Trade | Headlines of “AI job apocalypse” may drive fear, but data says otherwise. | Contrarian opportunity: long defensives on panic, rotate back into growth as data stabilizes. |
Bottom line
The AI jobs impact is more hype than reality for now.
Labor markets are weakening for cyclical reasons, not because of ChatGPT.
Traders should watch for disconnects between headlines and hard data — that gap can create both overreaction and opportunity.
US Government Shutdown and Jobs Data
US Government Shutdown and Jobs Data Shock Markets: What Traders Should Watch
The US government shutdown and jobs data are rattling Wall Street.
ADP reported a surprise loss of 32,000 private-sector jobs — the largest in over two years — while Washington’s shutdown is halting official BLS data.
Treasuries and gold rallied as traders bet on more Fed cuts.
Key developments
- ADP payrolls: -32,000 vs. +50,000 expected. Most significant contraction since March 2023.
- Revisions: August revised to -3,000 from +54,000, marking back-to-back declines.
- Shutdown impact: 750,000 federal workers furloughed; BLS jobs report delayed.
- Market reaction: 2-year Treasury yield dropped to 3.54% before bouncing. Gold hit a record $3,895/oz.
Market implications
The ADP miss highlights a cooling labor market at a time when investors are flying blind without official government reports.
Economists warn that weakness could spread, pressuring the Fed to accelerate rate cuts.
Meanwhile, the shutdown is adding political risk and uncertainty over fiscal spending.
Traders are treating private reports like ADP and ISM as substitutes. JPMorgan flagged “negative momentum” in labor, while Goldman said markets will “lean more heavily” on alternative data.
Trading setups
| Asset | Bias | Setup |
|---|---|---|
| 2-Year Treasury Yield | Bearish (yields) | Short below 3.60%. Weak jobs = more cuts, yields lower. |
| S&P 500 (SPX) | Neutral / Defensive | Choppy intraday. Long XLU/XLP vs. short XLF for defensive tilt. |
| Gold (XAU/USD) | Bullish | Record breakout. Buy dips above $3,850 targeting $4,000. |
| USD Index (DXY) | Bearish | Fed cut bets weaken dollar. Watch for break below 102.50. |
Intraday watch
- Equities: Fade rallies if SPX fails to hold. Shutdown headlines could drive whipsaws.
- Bonds: TLT long bias; dip buys as yields trend lower.
- Gold: Strong momentum — keep stops tight below $3,850.
Macro Scenarios: Bull / Base / Bear
| Scenario | Conditions | Equities (SPX) | Bonds (2Y/10Y) | Gold (XAU/USD) | USD (DXY) |
|---|---|---|---|---|---|
| Bull | Shutdown ends quickly; ADP weakness proves overstated; Fed cuts remain gradual. | SPX rallies back above 4700, led by cyclicals and tech. Target 4800 by Q4. | Yields stabilize; 2Y holds above 3.60%. Curve steepens modestly. | Gold pulls back toward $3,750 but holds above trendline support. | USD firms near 103 as growth optimism offsets Fed cut bets. |
| Base | Shutdown lasts weeks; ADP/BLS both show weak jobs; Fed delivers 1–2 cuts by year-end. | SPX trades choppy 4550–4650 range. Defensive sectors outperform cyclicals. | 2Y yield drifts to 3.40–3.50%. Long bonds find buyers on dips. | Gold sustains breakout above $3,850. $4,000 test by year-end likely. | USD softens gradually toward 101.50–102.00. |
| Bear | Prolonged shutdown; BLS reports (when published) confirm labor contraction; Fed forced into rapid cuts. | SPX breaks 4500, slides toward 4350. Small caps (IWM) underperform sharply. | 2Y yield breaks 3.25%. Flight-to-safety steepens curve aggressively. | Gold surges through $4,000, targets $4,200 in flight-to-quality bid. | USD tumbles under 100 as Fed front-loads easing. |
Bottom line
The US government shutdown and jobs data are reshaping trading conditions.
ADP’s weak print signals labor market fragility, while the shutdown obscures official reports.
For traders, that means higher volatility in bonds, gold, and defensive equities — and opportunity for those watching key levels.
Weak U.S. Job Market Flashes in ADP Data
Weak U.S. Job Market Flashes in ADP Data: What Traders Need to Know
The weak U.S. job market was evident again in the ADP data, which showed a loss of 32,000 private-sector jobs in September, contrary to forecasts for a gain of 45,000.
With the BLS jobs report delayed by a government shutdown, traders are leaning on ADP as the early signal — and markets are recalibrating expectations for the Fed.
Key takeaways from ADP
- Jobs lost: 32,000 vs. -3,000 in August and expectations for +45,000.
- Sector breakdown: Leisure & hospitality shed 19,000; education & health gained 33,000.
- Small biz pain: Firms with <50 employees cut 40,000 jobs; firms with 500+ employees added 33,000.
- Fed impact: Confirms dovish tilt. Weak hiring underpinned September’s rate cut and more cuts are expected.
Market implications
ADP’s weakness adds to the narrative of a slowing economy — and increases pressure on the Fed.
Bonds are likely to rally (yields fall), while cyclical equities could underperform.
Defensive sectors — healthcare, utilities, staples — may see rotation inflows if payroll weakness proves persistent.
Traders also note that ADP has flagged labor market softness ahead of BLS revisions in recent months.
If this pattern repeats, official data could catch down to ADP’s weak signal.
Trading setups
| Asset / Sector | Bias | Setup |
|---|---|---|
| 2-Year Treasury Yield | Bearish (yields) | Short bias below 4.10%. Weak jobs = more cuts = yields lower. |
| S&P 500 (SPX) | Neutral / Defensive Rotation | Choppy intraday. Long XLU/XLP vs. short XLY to hedge. |
| Small Caps (IWM) | Bearish | Small biz job losses = relative weakness. Short rallies. |
| Healthcare (XLV) | Bullish | Sector added jobs. Long on dips toward support. |
Intraday playbook
- Equities: Fade strength in cyclicals if SPX fails to hold above 4650.
- Bonds: Look for TLT long entries on dips — payroll weakness = bid for Treasuries.
- DXY: A softer jobs market could weaken USD if Fed cuts become more aggressive.
Bottom line
The weak U.S. job market just tightened the Fed’s dovish bias.
Expect increased volatility in bond and defensive equity sectors.
Day traders should watch for weakness in small-cap stocks, while swing traders can position for a rate-cut-driven rally in Treasuries.
Caterpillar Stock Outlook
Caterpillar Stock Outlook: Rate Cuts, AI Power, and a Technical Setup
After lagging earlier in the year, Caterpillar’s stock outlook has turned sharply higher.
Shares are up 22% in the past three months as Fed rate cuts, AI data center demand, and construction recovery create a potent mix of catalysts.
Why Caterpillar is rallying
- Rate cuts: The Fed resumed easing in September after staying sidelined most of 2025, a tailwind for cyclicals.
- Tariff fears fade: Trump’s steep tariffs raised costs but didn’t derail demand.
- Valuation expansion: The forward P/E ratio has stretched to 23 times, up from 17 times a year ago, as investors price in a recovery.
- AI kicker: Data centers need backup power. Caterpillar is positioned as a supplier to the AI boom.
Wall Street view
Baird’s Mig Dobre called CAT a “Bullish Fresh Pick,” citing catalysts from construction, mining, and lower inventories.
BofA’s Michael Feniger has a Buy with a $517 price target. Dobre sees $540, implying 16% upside.
Street sentiment is improving: 50% of analysts now rate CAT a Buy (up from 33% a year ago). The average price target of $460 lags behind current prices, but revisions are moving higher.
Technical setup
Caterpillar trades 4% below its 52-week high after a modest reversal from intraweek peaks.
Key support sits at $441.25, the prior breakout level cleared September 17.
A pullback to that zone would be a compelling entry point ahead of a potential year-end rally.
Longer term, a test of the $500 round number looks likely into early 2026.
Trading levels to watch
| Ticker | Support | Resistance | Target |
|---|---|---|---|
| CAT | $441.25 | $480.00 | $500.00+ |
Trading setups
- Day trading: Fade intraday strength if CAT pushes +2% above resistance with low volume. Buy dips at $445–450 for scalp entries.
- Swing trading: Hold long above $441 support. Initial target $480; breakout retest could drive $500+ by early 2026.
- Relative trade: Long CAT vs. short DE (John Deere) to capture CAT’s stronger relative strength trend.
Bottom line
The Caterpillar stock outlook has flipped bullish. Rate cuts, AI power demand, and cyclical tailwinds all support higher prices.
Traders should watch $441 as the key threshold and $500 as the longer-term target.
With improving sentiment and catalysts aligning, CAT looks ready to keep climbing.