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.Trump Tariff Threats Shake Market Confidence
Trump Tariff Threats Shake Market Confidence
Wall Street stumbled on Monday as Trump tariff threats returned to the headlines, unsettling markets that had just climbed to fresh record highs. The Dow Jones Industrial Average dropped 422 points, or 0.94%, while the S&P 500 lost 0.79%. The Nasdaq Composite shed 0.92% by the close. Though the final 15 minutes of trading saw modest buying, the session was risk-off.
President Trump reignited trade tensions with a series of letters to world leaders, warning that sweeping new tariffs between 25% and 40% would take effect by August 1 unless significant trade agreements are reached. Markets responded swiftly. Risk assets were hit the hardest, with the small-cap-heavy Russell 2000 plunging 1.6% amid growing concerns about economic growth.
“Regardless of the news, the market came into this week trading very extended,” said Justin Walters of Bespoke Investment Group. “With over 57% of S&P 500 stocks overbought, downside mean reversion was likely.” These remarks underscore the impact that Trump’s tariff threats can have when layered on top of already strained technical conditions.
The CBOE Volatility Index (VIX) spiked 9% to just under 18—still a far cry from its April highs above 60 when trade tensions first flared. Meanwhile, Treasury yields climbed, with the 2-year note reaching 3.9% and the 10-year yield touching 4.39%. Bonds were under pressure following Trump’s signing of his new tax bill while markets were closed for the holiday weekend.
According to Andrew Brenner of NatAlliance Securities, “We see more legacy spending than we would like, and the deficit going higher in the short term.” The bond market appears to be catching on, but full-on vigilantism hasn’t emerged—yet.
Low Volatility and Momentum Stocks Show Relative Strength
Despite the broad weakness, not all stocks fared equally. Utilities and other low-volatility sectors outperformed, with the Invesco S&P 500 ex-Rate Sensitive Low Volatility ETF among the top performers. Momentum ETFs also held up better, supported by the relative stability of names like Palantir Technologies.
Interestingly, Bitcoin remained resilient, down just 0.2% over the 24 hours, suggesting that crypto assets were not swept up in the same wave of risk aversion.
Outlook: Brace for August
Without major economic reports on the calendar this week, markets may remain vulnerable to headline-driven swings. If Trump tariff threats escalate, traders could see increased volatility across equity and bond markets. On the other hand, if negotiations progress and tariffs are delayed or canceled, stocks could rebound sharply.
For now, the market appears to be recalibrating from a position of overextension. The original July 9 tariff deadline has been delayed to August 1, and that date now looms large over global markets. As history has shown, if Trump’s tariff threats are reversed, the market has plenty of room to rally. But if they are enforced, the downside reaction could be just as powerful.
The path forward will largely depend on trade rhetoric emanating from Washington. Traders should prepare for more headline-driven volatility as the clock ticks toward August.
Key Index Summary: cnbc.com
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S&P 500 (SPX): 6229.98 (▼49.37, -0.79%)
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Dow Jones (DJIA): 44406.36 (▼422.17, -0.94%)
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Nasdaq Composite (COMP): 20412.52 (▼188.59, -0.92%)
Trump’s new budget passed today
Impact of Trump’s New Budget Passed Today on Next Week’s Stock Market
On July 3, 2025, Congress passed the highly anticipated “One Big Beautiful Bill,” a sweeping fiscal policy package aimed at reshaping U.S. spending and taxation priorities. While the legislation is expected to have long-term implications for the U.S. economy, many investors are now focused on its short-term impact—particularly how Trump’s new budget passed today will influence stock market behavior next week.
📈 1. Equity Rally Likely in Energy & Industrials
One of the most market-moving provisions in the bill is the rollback of clean energy subsidies and the expansion of support for traditional energy sources. Oil, gas, and coal companies were among the top gainers following the announcement, with stocks such as Ramaco Resources and Peabody Energy climbing by double digits. Industrial names, such as Caterpillar and Halliburton, also experienced buying pressure due to increased infrastructure allocations.
These sectors are positioned to benefit in the coming week as institutional investors rebalance portfolios to align with the bill’s fiscal direction. Since Trump’s new budget, which passed today, favors deregulation and capital investment in physical infrastructure, traders are likely to rotate into cyclical and materials-heavy sectors.
🔺 2. Boost to Business & Corporate Stocks
The bill makes the 2017 Trump-era tax cuts permanent and reinstates full expensing of capital expenditures. This provision alone is expected to unleash a wave of planned corporate spending and hiring, particularly in the tech, manufacturing, transportation, and logistics sectors.
Publicly traded firms that heavily invest in equipment and R&D—such as Boeing, Lockheed Martin, and Intel—stand to benefit the most. Next week, traders should watch for increased call option volume and breakout patterns in these names as Wall Street prices in renewed optimism for earnings. With Trump’s new budget passed today, many companies have greater visibility on tax planning and operational costs for the next decade.
⚠️ 3. Rising Bond Yields Could Add Volatility
One of the biggest concerns among analysts is the projected $3–$ 4 trillion increase in the federal deficit over the next decade. The U.S. Treasury is expected to increase short-term borrowing to finance the government’s expanded obligations. This has already pushed up yields on 2- and 10-year Treasury notes.
Higher yields could weigh on interest-rate-sensitive sectors, such as real estate and utilities, while providing a tailwind to financial stocks. Traders should brace for potential volatility, especially if next week’s Treasury auctions show weak demand. The rise in yields may also reignite debates about long-term inflation risks, adding complexity to the market’s reaction to Trump’s new budget, passed today.
💵 4. Dollar Weakness & Inflation Risks
Currency markets are signaling concern. As fiscal expansion combines with no clear offsetting spending cuts, the U.S. dollar has already weakened slightly on expectations of future inflation and deficit monetization. This trend could accelerate next week, especially if global investors perceive U.S. debt as less attractive relative to other developed economies.
Dollar-sensitive assets, such as gold and export-heavy equities, could gain, while domestic consumers may begin to feel the squeeze if inflation expectations rise. With Trump’s new budget passed today, the short-term upside for equities may come at the cost of currency stability and long-term purchasing power.
⚙️ 5. Sector Separation: Winners vs. Losers
The market is already pricing in winners and losers. Traditional energy, industrials, and defense stocks are likely to continue rallying due to favorable allocations in the bill. Meanwhile, sectors tied to green energy, social programs, and healthcare may experience near-term weakness as funding is reduced or reallocated.
Solar, wind, and EV-related names—such as Enphase, SolarEdge, and Rivian—may continue to underperform as institutional capital shifts away from ESG-focused investments. Health insurers and hospital chains could also see a downside due to Medicaid rollbacks. In short, Trump’s new budget, which was passed today, has created a clear line of demarcation between policy-supported and policy-opposed sectors.
🔭 Week-Ahead Outlook Summary
Factor | Expected Impact |
---|---|
Continued equity gains | Positive sentiment from corporate-friendly policy |
Bond volatility | Watch treasury auctions and yields |
Inflation signals | Elevated market sensitivity to CPI/PPI data |
Sector dispersion | Strong divergence between energy/industrial vs healthcare/clean energy |
📚 Related Reading
- Reuters: U.S. House Approves Trump’s Mega Budget Bill
- Investor’s Business Daily: Fossil Fuels Rally After Budget Passed
- MarketWatch: Treasury to Flood Market With Short-Term Debt