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’s new budget passed today

Jul 3, 2025 | 6:06 pm

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.

Trump’s new budget passed today

📈 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

 

What ISM PMI Is & June’s Preview

Jun 30, 2025 | 5:52 pm

📊 What ISM PMI Is & June’s Preview

  • Definition: The ISM Manufacturing Purchasing Managers’ Index (PMI) is a key monthly survey that gauges new orders, production, employment, supplier deliveries, and inventories. A reading above 50 signals expansion, while below 50 signals contraction reuters.com

  • May’s Data: The May PMI stood at 48.5, marking the third consecutive month below 50, indicating continued contraction in U.S. manufacturing.

  • Forecast for June: Markets expect a slight uptick. Investing.com notes June’s PMI likely rose to 48.8 from a consensus of 48.5. Still below 50, but a move closer to neutral.

Market Implications of a Weak PMI

What ISM PMI Is & June’s Preview

1. Equities

  • A weaker-than-expected PMI (~48.5) can dent industrial-heavy stocks (e.g., materials, energy) as it signals weaker corporate profits.

  • Conversely, signs of stabilization or a rebound toward 50 may support small-cap stocks, which historically benefit from early manufacturing improvements cambiar.com.

2. Fixed Income

  • A prolonged PMI below 50 fuels expectations of an easing Federal Reserve, which in turn cools the appetite for bonds.

  • Conversely, a surprisingly strong PMI (>50) might spark concerns about inflation, causing bond yields to rise and prices to fall.

3. Currency Markets

  • A weak PMI tends to weaken the U.S. dollar, lowering demand for U.S. debt and increasing dollar-denominated supply.

  • A stronger print can boost the dollar, especially if it reinforces a stronger-than-expected U.S. growth narrative.

4. Fed Policy

  • The Federal Reserve closely monitors the ISM PMI as a leading indicator of inflationary pressures and economic momentum.

  • Continued contraction would tilt the Fed more toward a hold or cut stance, while signs of strength might delay rate cuts or even prompt hawkish signals.

What to Watch in the June PMI Release (July 1 @ 10 a.m. ET)

Scenario Likely Market Reaction
Lower than forecast (~48) Bonds rally, yields drop, dollar retreats, equities (esp. cyclicals) under pressure
As expected (~48.8) Sideways in bonds and stocks; traders wait for the following data points or Fed minutes.
Above 50 (surprise) Market trends could reverse—bonds sell off, dollar strengthens, cyclical stocks rally.

Strategy Takeaways

  • Equity Allocation: Watch industrials and small-caps—early PMI strength tends to benefit these groups.

  • Bond Positioning: Bond investors should monitor the PMI for signs of a Fed pivot; a weak print is supportive of bonds.

  • Forex and Macro Plays: Traders in USD pairs or commodities, such as oil and metals, can use PMI-driven USD moves as a directional signal.

  • Fed Outlook: A soft PMI eases inflation pressure, supporting a dovish Fed bias—strong umpree might delay that.

Summary

The June ISM Manufacturing PMI, to be released July 1, holds significant sway over short-term market moves:

  • Equities: Especially cyclical sectors and small caps.

  • Bonds: Yield expectations hinge on PMI direction.

  • Currency: Dollar strength tied to economic surprise.

  • Fed policy: PMI remains a key Fed-watch input.

Whether the index remains in contraction territory, inches toward 50, or jumps into expansion, traders will interpret it through the lens of growth, inflation, and rate policy. A surprise beat could shift sentiment quickly, while a dovish miss could further affirm easing expectations.

How I Used RSI Divergence and Pivot Rejection to Short PLTR for a Clean VWAP Win

Jun 27, 2025 | 11:37 am

PLTR Trade Breakdown: A Short Setup Backed by Pivot Resistance, VWAP Reversion, and RSI Divergence

June 27, 2025

Today’s short in Palantir Technologies (PLTR) was a textbook intraday setup that brought together multiple high-probability signals. From pivot rejection to RSI divergence and VWAP targeting, the trade aligned market psychology and technical structure — offering a clean, risk-defined opportunity late in the session.

Trade Summary

  • Ticker: PLTR (Palantir Technologies)

  • Entry: Short at 139.78 (stop-limit order)

  • Time of Entry: 13:45 ET

  • Target: 139.08 (just above VWAP)

  • Tools Used: Pivot Points, VWAP, RSI (14), Volume-by-Price

The Setup Explained

🧭 Pivot Level Rejection

The S1 pivot level at 139.81 acted as a key resistance point. Price made a higher high into that level just before 13:45 but failed to break through meaningfully. This behavior indicated buying exhaustion, making it a prime location for a short entry, especially when other indicators supported a downside reversal.

🪞 Bearish RSI Divergence

Here’s what made the short especially compelling: as price made that higher high, the 14-period RSI made a lower high, forming a clear bearish divergence. Additionally, the RSI was rolling down through 70, indicating that the prior overbought condition was unwinding and momentum was fading.

This divergence is often one of the most reliable reversal signals when confirmed by price structure, and in this case, the failure at S1 made it actionable.

🎯 VWAP as a Target

The VWAP (Volume Weighted Average Price) sat around 139.08, offering a clear reversion magnet. In the afternoon, especially on reversal setups, VWAP tends to act as a gravitational pull for price, particularly after failed rallies.

Placing the target just above VWAP ensured a realistic exit and kept the trade out of the noise of potential mid-range chop.

📊 Volume-by-Price Void

The Volume-by-Price profile exhibited light participation between 139.60 and 139.10, creating a low-resistance pathway for the price to move quickly once it failed to hold below the S1 pivot.

A dense volume shelf was positioned near VWAP, indicating that supply would likely return to that zone. This made it the logical target — and further validated the decision to exit before buyers regrouped.

Execution Detail

At 13:45 ET, a stop-limit short at 139.78 was triggered as the price rolled over from the S1 pivot rejection. Momentum quickly shifted, and the price moved smoothly down toward the VWAP, achieving the exit at 139.08 with a limited drawdown.

This was a low-risk, high-conviction trade — the kind that forms when structure and psychology align.

Key Lessons and Takeaways

Indicator Insight Role in the Trade
Pivot Points S1 acted as resistance Defined entry zone
RSI Divergence Price ↑, RSI ↓ Early warning of reversal
VWAP Below S1 Target and mean reversion anchor
Volume-by-Price Light volume pocket Gave room for clean move

Conclusion

This PLTR trade exemplifies how RSI divergence, particularly when combined with pivot resistance and VWAP proximity, can provide razor-sharp intraday opportunities. Combined with volume profile clarity, it offered not just a strong entry but also a logical and highly probable exit.

Whether you’re actively trading or reviewing your own setups, this is a perfect example of how blending momentum, price structure, and volume logic can improve your edge.