The Smart Earnings Season Strategy Traders Are Using Now

Earnings season is in full swing, and with it comes the potential for both significant gains and painful losses. For traders and investors, understanding the starting point of a stock’s price action is a critical part of any earnings season strategy.

Why a Beat Isn’t Always a Beat

A common misconception during earnings season is that strong earnings automatically translate to higher stock prices. This past Thursday told a different story: American Airlines Group dropped 9.6%, IBM fell 7.7%, and Honeywell International declined 6.2%—despite all three reporting earnings that topped expectations. The issue? Each of these stocks had already posted double-digit gains over the past three months.

On the other hand, Raymond James Financial climbed 3.7% and CenterPoint Energy rose 1.9% despite reporting profits that fell short of estimates. This contrast highlights the importance of evaluating a stock’s position heading into earnings.

Oversold vs. Overbought: The Key to Post-Earnings Moves

Katie Stockton, founder of Fairlead Strategies, emphasizes that stocks that are oversold going into earnings often have a lower bar to clear. “We like stocks that are relatively oversold coming into earnings,” says Stockton. “They theoretically have a lower bar set in price terms as investors absorb the earnings data.”

Oversold is a technical term that refers to stocks that have declined sharply, often due to negative sentiment or prior bad news. As a result, much of the negativity may already be priced in—making it easier for these stocks to rebound if earnings are merely “less bad” than feared.

Stocks to Watch: The Oversold List

According to Fairlead’s analysis, six stocks stand out as potential candidates for a positive earnings reaction:

• American Tower REIT (AMT)

• Visa (V)

• Procter & Gamble (PG)

• Merck (MRK)

• Mondelez International (MDLZ)

• CVS Health (CVS)

These stocks have gained just 3% on average since the April lows, lagging the S&P 500 by roughly 22 percentage points. With an average Buy rating ratio of 72% (compared to 55% for the broader S&P 500), they are also fundamentally supported by analysts.

The Overbought Challenge

In contrast, stocks that are overbought heading into earnings face a much higher bar to continue climbing. Fairlead’s “overbought” list includes:

• Amazon (AMZN)

• Meta Platforms (META)

• Microsoft (MSFT)

• Boeing (BA)

• Royal Caribbean Group (RCL)

• Seagate Technology (STX)

These names have soared an average of 66% since the April lows. While Wall Street remains bullish—Meta, Microsoft, and Amazon have Buy ratings near 90%—it will take stellar earnings reports to push these stocks significantly higher.

Lessons for Investors

The key takeaway for any earnings season strategy is that price momentum going into a report often matters more than the earnings numbers themselves. Overextended stocks may face profit-taking even after solid results, while oversold names can surprise to the upside if expectations are already low.

Elon Musk Predicts $30 Trillion Tesla Humanoid Robot Revenue

Tesla CEO Elon Musk unveiled ambitious plans for the company’s future, highlighting the potential of Tesla humanoid robot revenue during a virtual appearance at the Tesla Owners of Silicon Valley 2025 “Takeover” event in San Mateo, California. This annual gathering, which attracts Tesla and Musk enthusiasts from around the globe, served as a platform for Musk to share his bold outlook on artificial intelligence, robotics, and the next phase of Tesla’s growth.

A $30 Trillion Vision

Musk made headlines by suggesting that Tesla’s humanoid robot division could hypothetically generate $30 trillion a year in revenue. Tesla is leveraging its artificial intelligence expertise and advanced manufacturing capabilities to develop its Optimus humanoid robots. Musk described the third-generation Optimus design as the right platform for mass production, with plans to produce a few hundred units by the end of 2025. Although this figure is lower than earlier expectations of a few thousand units, Musk indicated that the redesign would enable faster scaling beginning in 2026.

According to Musk, the global market for humanoid robots could be massive. “There’s a market for 20 billion robots,” he said. “Hypothetically, if Tesla was making one billion of these a year… maybe on the order of $30,000, I’m just guessing here, that’s $30 trillion in revenue.” While this is still an aspirational scenario, it underscores Tesla’s bet on robotics as a transformative industry.

AI and Robotics: Tesla’s Next Frontier

Tesla is investing heavily in artificial intelligence, both for its autonomous vehicle systems and its humanoid robots. Musk believes robots could become “the world’s biggest product,” surpassing traditional industries like housing, consumer electronics, and automotive manufacturing. Nvidia CEO Jensen Huang has similarly predicted that robots could eventually become the largest global market, echoing Musk’s optimism.

Market analysts also see the potential disruption. Shay Boloor, chief market strategist at Futurum, noted that the world currently spends about $50 trillion on human labor annually, suggesting that useful humanoid robots could radically reshape the labor market. Musk envisions a future where AI and robotics usher in an “age of abundance,” effectively eliminating hard labor.

Retail Investor Spotlight on Tesla

Events like the Silicon Valley “Takeover” have become important forums for retail investors, who own over 40% of Tesla’s publicly traded shares—far higher than the 25% average ownership seen in other “Magnificent Seven” stocks such as Apple, Amazon, and Microsoft.

Tesla’s stock has experienced significant volatility in recent weeks. Shares fell 8% after the company’s second-quarter earnings report but recovered 4% on Friday. Despite being down 22% year-to-date, Tesla stock has gained approximately 44% over the past 12 months. With a price-to-earnings ratio of roughly 180 based on 2025 estimates—second only to Palantir Technologies in the S&P 500—investors are clearly factoring in significant future growth, possibly tied to Musk’s Tesla humanoid robot revenue vision.

The Road Ahead

While Musk’s prediction of $30 trillion in annual humanoid robot revenue remains distant and highly speculative, Tesla’s investments in AI and robotics highlight a strategic pivot that could define its long-term future. For now, these projections serve as both inspiration and a reminder of the bold thinking that has propelled Tesla into the spotlight.

White House Intensifies Pressure on Fed for Dramatically Lower Interest Rates

The White House pressure on Fed Chair Jay Powell intensified on Sunday as senior officials demanded “dramatically lower” interest rates ahead of the Federal Open Market Committee’s (FOMC) key meeting this week. With rates currently at 4.25–4.5 percent, the Trump administration is pushing for an aggressive cut to 1 percent, claiming that high borrowing costs are stifling economic growth.

White House Criticism of Powell

Russell Vought, director of the White House Office of Management and Budget, criticized Powell for being “too late” in cutting rates, while also blasting the Federal Reserve’s $2.5 billion headquarters refurbishment as a “largesse monstrosity.”

“We believe, on a host of fronts, Chairman Powell has been too late,” Vought told CNN. “The president is putting his viewpoints out there with regard to what interest rates should be, which is dramatically lower than where they are.”

Vought’s comments underscore the growing White House pressure on Fed policymakers to act swiftly, even as inflation data remains mixed.

Trump’s Campaign for Lower Borrowing Costs

President Donald Trump has made it clear that he wants interest rates cut to 1 percent. His campaign against Powell has included threats to fire him and highly public criticism of the Fed’s policy stance. Trump even took the unusual step of personally visiting the Fed’s headquarters last week, inspecting its ongoing $2.5 billion refurbishment.

On Friday, Trump hinted that Powell had signaled support for lower rates, saying he had a “very good meeting” with the Fed chair. “The U.S. economy is doing really well,” Trump said, adding that Powell would likely “recommend lower rates” to the rest of the FOMC.

Commerce Secretary Joins the Chorus

U.S. Commerce Secretary Howard Lutnick echoed the call for rate cuts, arguing that current policy does not reflect America’s economic momentum. “The president’s bringing in hundreds of billions of dollars, reducing our deficit. How can that not be the underpinning for us having less debt and lowering rates?” Lutnick told Fox News.

Divisions Within the Fed

The White House pressure on Fed officials comes at a time of growing division among policymakers. Some FOMC governors, including Chris Waller and Michelle Bowman—both Trump appointees—have signaled support for a 25-basis-point cut as soon as Wednesday.

Waller, in particular, has suggested that tariffs imposed by the Trump administration are a “one-off shock” that won’t drive long-term inflation. He also expressed concerns that labor market data is weaker than headline numbers suggest.

Rates on Hold for Now?

Despite the mounting pressure, the Fed is widely expected to hold rates steady at this week’s meeting. Policymakers have expressed a desire to assess the full impact of tariffs, some of which are set to increase to nearly 50 percent on countries that have not finalized trade deals with Washington.

After cutting rates by a full percentage point last year, the Fed has paused further moves in 2025 amid concerns that the trade war could reverse progress toward its 2 percent inflation goal. A potential cut could come at the September FOMC meeting, depending on incoming economic data.

Market Reactions

Markets are closely watching for signs of a policy shift. Jonathan Gray, president of Blackstone Group, told the Financial Times that declining wage inflation and slowing rent increases could give the Fed room to cut rates later this year.

For now, tensions between the White House and the Fed remain high, with Trump’s aggressive campaign raising questions about the central bank’s independence.

US-EU Trade Deal: Trump Secures Tariffs and Massive EU Spending Commitments

The United States and the European Union have reached a landmark US-EU trade deal, imposing American tariffs of 15% on most imports from the bloc while securing hundreds of billions of dollars in commitments for U.S. energy and military products. President Donald Trump announced the agreement following high-stakes negotiations with European Commission President Ursula von der Leyen at his Turnberry golf resort in Scotland.

Key Details of the Agreement

Under the terms of the US-EU trade deal, the EU will:

• Spend an additional $750 billion on U.S. energy products.

• Invest $600 billion directly in the United States.

• Purchase a “vast amount” of American military equipment worth hundreds of billions of dollars.

In exchange, the U.S. will impose a 15% tariff on EU goods, including automobiles—half the 30% Trump had previously threatened. In return, the EU will lower tariffs on certain American exports to zero, creating what both sides describe as a fairer trade balance.

Calling it “probably the biggest deal ever reached in any capacity, trade or beyond trade,” Trump framed the agreement as a significant victory following months of tense negotiations.

A Preempted Trade War

The deal helps avert what could have become a severe transatlantic trade war. Before this breakthrough, Trump’s administration had warned that a failure to reach terms by August 1 would result in 30% tariffs on EU imports. The EU had prepared retaliatory tariffs of up to 30% on approximately €92 billion of U.S. exports.

Von der Leyen characterized the talks as “tough” but ultimately constructive. “This brings both sides closer,” she said. She acknowledged the EU’s trade surplus of nearly €200 billion with the U.S., adding that the new agreement “creates certainty in uncertain times for citizens and businesses on both sides of the Atlantic.”

Lingering Trade Concerns

Despite the upbeat tone, uncertainty persists over future U.S. tariffs on critical sectors, including pharmaceuticals, semiconductors, and aerospace. While the 15% tariff applies broadly to EU imports, Trump confirmed that steel and aluminum tariffs would remain at 50%, disappointing European industries that had hoped for reductions in those areas.

Adding another layer of complexity, U.S. Commerce Secretary Gina Raimondo, not Howard Lutnick, revealed that new tariffs on semiconductors would be announced in two weeks following a national security review.

A High-Stakes Negotiation

The one-hour meeting at Turnberry underscores Trump’s aggressive trade strategy, which has involved pressuring America’s trade partners into concessions through threats of steep tariffs. While the EU’s commitments—especially in energy and defense—are seen as significant wins for the U.S., European officials have expressed concern over the unpredictability of U.S. trade policy moving forward.

Markets Kick Off Final Week of July with Optimism Amid Earnings,
Economic Data and Fed Decision

Stock futures climbed Sunday evening as investors geared up for a pivotal week filled with major economic reports, tech sector earnings, and the Federal Reserve’s upcoming interest rate decision.

As of 6 p.m. Eastern time, Dow Jones Industrial Average futures rose nearly 200 points, or 0.4%. S&P 500 futures gained 0.4%, while Nasdaq Composite futures advanced 0.5%.

Trade Developments Lift Sentiment

Markets were buoyed by news of a fresh trade agreement between the U.S. and the European Union, announced Sunday. Under the deal, EU imports into the U.S. will face a 15% tariff, which is half the rate previously threatened by President Donald Trump.

Additionally, an American trade delegation is scheduled to meet its Chinese counterparts on Monday in Stockholm. These discussions aim to build on the temporary trade truce reached in June, potentially reducing trade tensions that have weighed on global markets.

A Heavy Week of Data and Earnings

Investors are preparing for a barrage of economic reports this week, which could provide insight into the health of the U.S. economy. Adding to the mix, the Federal Reserve’s interest rate decision on Wednesday is expected to be a major catalyst. Futures markets widely anticipate the Fed will hold rates steady, despite ongoing pressure from Trump to implement cuts.

Tech Giants in Focus

This week will also feature earnings from some of the market’s most influential tech companies:

• Meta Platforms (META) and Microsoft (MSFT) report on Wednesday.

• Amazon (AMZN) and Apple (AAPL) follow on Thursday.

Given their massive market capitalizations, these results could significantly sway broader indexes, particularly the tech-heavy Nasdaq.

Record-Breaking Momentum

The S&P 500 closed at a record high on Friday, marking its first streak of daily record closes in a week since November 2021. The Nasdaq notched its ninth record close in 10 sessions, while the Dow climbed 208 points, inching closer to its December 4 record level.

With trade negotiations, corporate earnings, and central bank policy all converging this week, volatility and opportunity are likely to define the markets as July draws to a close.

The Role of Performance Psychology in Day Trading: Why Breaks Matter

Day trading stocks and futures demands intense focus, emotional regulation, and quick decision-making. Traders often spend hours glued to their screens, monitoring market movements and executing trades within fractions of a second. However, research in performance psychology suggests that taking intentional breaks and engaging in recreational activities is not just beneficial but essential for sustained success in trading.

1. Performance Psychology and the Importance of Time Off

Performance psychology emphasizes the role of mental resilience and cognitive clarity in achieving peak performance. According to Dr. Anders Ericsson, a pioneer in performance research, high achievers across fields—including trading—benefit from structured periods of rest to allow for mental recovery and improved focus. His studies on deliberate practice show that elite performers rarely push themselves for more than 4-5 hours of peak mental effort daily without interspersed breaks.

Dr. Jim Loehr, author of The Power of Full Engagement, explains that the key to peak performance is the rhythmic oscillation between energy expenditure and energy renewal, emphasizing that recovery is not a luxury—it is a necessity.

In trading, where mental fatigue can lead to impulsive decisions and costly mistakes, taking time away from the screen helps reset the brain and prevent burnout.

2. Why Breaks Boost Day Trading Performance

Breaks are proven to enhance decision-making, emotional control, and overall cognitive function. Research published in Harvard Business Review shows that short mental breaks reduce decision fatigue, leading to better, more rational trading strategies. For day traders, even a 10-minute pause every hour can dramatically improve results with:

1. Improved Decision-Making: Breaks lower cortisol levels, which can otherwise lead to stress-driven trading decisions.

2. Increased Focus: Short breaks throughout the trading session, such as a walk or quick stretch, refresh the mind and improve concentration.

3. Emotional Balance: Recreational activities help traders detach from the highs and lows of market swings, enabling them to return with a calm and rational mindset.

4. Preventing Burnout: Day traders who integrate fun activities like weekend baseball games with friends are less likely to suffer from fatigue and mental exhaustion.

3. Going to a Baseball Game: A Mental Reset

We find that one highly effective method for decompressing is going to see a baseball game with friends. It’s a chance to step away from the high-pressure trading environment, enjoy a slower-paced experience, and engage in meaningful social interaction. A study published in Frontiers in Psychology found that leisure activities combined with social engagement reduce stress, improve mood, and enhance cognitive flexibility—all crucial for day traders. Dr. Brett Steenbarger, a trading psychologist, advocates for incorporating “recovery rituals” into trading routines and taking time off isn’t a luxury—it’s part of the training. Steenbarger points out that traders who treat their mental recovery as seriously as their market analysis tend to show better long-term consistency.

Baseball, in particular, is a great metaphor for trading: success often comes from patience, strategy, and mental toughness. Taking time to go to a game allows traders to step out of the high-stakes trading mindset and spend time in a relaxed social setting out of the office, breathing fresh air—elements that counterbalance the stress of the trading floor.

4. Practical Tips to Apply Performance Psychology in Trading

• Schedule short breaks during high-intensity trading hours.

• Plan regular leisure activities like attending a baseball game or enjoying time with friends.

• Use mindfulness techniques (deep breathing, short walks) to reset during the day.

• Track mental energy and decision quality to identify fatigue triggers.

5. Long-Term Benefits of Fun and Recovery for Day Traders

Day trading is a mentally demanding pursuit that requires sustained focus, emotional control, and the ability to make fast, high-stakes decisions. Without proper recovery, even the most skilled traders can experience mental fatigue, decision-making errors, and emotional burnout. This is where performance psychology emphasizes the critical role of fun and recovery.

Dr. Mihaly Csikszentmihalyi, author of Flow, explains:

“To be creative and productive, the mind needs periods of detachment and play. Without breaks, flow becomes impossible to sustain.”

This principle applies perfectly to trading. The concept of “flow” is highly relevant for day traders, who rely on entering a focused state where their skills and market knowledge align seamlessly. However, this state can only be maintained when balanced with intentional downtime to process and reset.

When traders build recovery periods into their weekly routines, they not only sharpen their focus but also enhance emotional resilience and stress tolerance. Over time, these breaks reduce impulsive decision-making, improve strategic thinking, and help traders sustain long-term profitability. By incorporating both micro-breaks during trading hours and larger, fun activities outside the market, traders can ensure they return to their screens refreshed, clear-headed, and ready to perform at their best.

Final Takeaway

Performance psychology and the importance of time off or fun or breaks to enhance performance overall when day trading stocks and futures cannot be overstated. Whether it’s taking a mid-week pause or enjoying a night out at a baseball game, traders who prioritize recovery tend to perform better and avoid burnout.

Rare Fed Dissent Looms as Waller and Bowman Push for Rate Cuts

For the first time in over three decades, the Federal Reserve may see a rare Fed dissent among its board governors. Such internal divisions are uncommon and often signal more profound shifts in monetary policy thinking—something financial markets closely watch.

A Potential Double Dissent

The upcoming July 29-30 Federal Open Market Committee (FOMC) meeting could mark the first time since 1993 that two Fed governors vote against the consensus at the same meeting. Fed Governor Christopher Waller and Vice Chair for Supervision Michelle Bowman—both appointed by former President Donald Trump—have publicly expressed their support for an interest rate cut. However, markets overwhelmingly expect the committee to keep the federal-funds rate steady in the 4.25% to 4.5% range.

Should Waller and Bowman break ranks, this rare Fed dissent would not only underscore growing frustration among the central bank’s dovish members but could also foreshadow a shift in the Fed’s policy stance ahead of the next FOMC meeting in September.

Powell’s Balancing Act

Fed Chair Jerome Powell remains cautious, insisting that inflation must show a sustained move toward the 2% target before rate cuts can be considered. Recent inflation data, which rose to 2.7% in June, partly due to tariffs, has reinforced the committee’s cautious approach. Futures markets are pricing in just over a 60% chance of a quarter-point cut in September, but virtually no chance of a July cut.

Waller and Bowman argue that waiting could backfire. Waller believes tariff-driven inflation is temporary and cites weakening consumer spending and labor demand as reasons to cut now. Bowman has echoed these concerns, emphasizing the need to prepare for a softer economic outlook.

Historical Context of Dissent

The last time two Fed governors dissented simultaneously was in December 1993, under Alan Greenspan, when Wayne Angell and Lawrence Lindsey opposed a policy bias toward looser monetary conditions. In Powell’s tenure, dissent has been rare—only about 3% of decisions have seen a governor break from the consensus.

Political and Institutional Pressure

The tension surrounding the Fed isn’t limited to internal debates. Former President Trump has repeatedly criticized Powell for keeping rates too high and has even floated the idea of removing him, citing a $2.5 billion renovation of the Fed’s headquarters as evidence of mismanagement. Although legal experts suggest firing Powell would be difficult, the mere suggestion has shaken investor confidence.

Outside voices have added to the pressure. Notably, economist Mohamed El-Erian has called for Powell’s resignation to protect the Fed’s independence, while Treasury Secretary Scott Bessent has hinted at broader institutional reforms.

Why This Matters for Markets

The July meeting is about more than just interest rates. It’s a test of Powell’s ability to maintain consensus within the Fed, fend off political influence, and signal a clear path for monetary policy. A rare Fed dissent could spark market speculation that a rate cut is imminent, or that internal divisions are becoming too pronounced to ignore.

As Powell approaches the Fed’s Jackson Hole symposium—his final one as chair—the stakes are high. Whether the Fed holds rates or shifts policy, markets will interpret every signal as either a sign of resilience or a reaction to mounting political and economic pressure.