The market is getting a reprieve after tensions between Israel and Iran seem to be fading rapidly.  An agreement to work on a deal is in place, and now, we just need an actual deal.  Progress is certainly being made, but I’m always a bit reluctant to disregard risk, and especially so when the ink isn’t on the paper for a full deal.

But with this expectation, the market is breaking out of the prior range and getting very bullish very quickly.  This is great for trading opportunities based upon technicals and AI signals if fundamental inputs that are difficult to predict can stop being the main driver of the market.  Now, the money flow and analysis of it over the longer term can dominate the probability of trading success, and that sets up really well for the Stock Forecast Toolbox!

Before I get into a new idea, I want to review last week’s setup.  We had the potential for bullish behavior in SBUX:

Last week’s chop left SBUX fairly stable in overall price, but there wasn’t a bullish move to start this week.  The broad market money flow is looking elsewhere, and if that’s the case, I’d rather focus on the names that seem to be most affected by confidence in market stability and a growing economy without the overhang of middle east tensions.

So, with that, I looked back to a sector that tends to perform well when the global economy and the world is in a more stable environment.  And that sector is financials.  First, let’s look at XLF on both a technical basis and what AI sees for the near future:

XLF is testing highs of the range and on top of that showing a bullish bias from the AI models.  This is a nice setup, but I think I can find something more exciting by digging into an individual name that has been a leader in the financials space recently.

So, with that, I’m looking at JPM:

JPM is breaking out to new highs for 2025.  That’s a great sign – JPM stock has pushed through resistance and is leading the market higher.  On top of that, the bullish trend forecasted by AI is incredibly strong.

And on top of all of this, the options market is pricing JPM options at 6 month lows for options expiring prior to their upcoming earnings on July 15th.  That means this is the cheapest these options have been in recent history while there’s a potential for a predictable bullish move, and that sets up very well for outright long calls such as the July 11th $280 Calls for $4.90.  If the bullish move predicted by AI comes to fruition, these calls would be ~$25 in two weeks.  While I’m not sure I want to bet on that bullish of an outcome, this is one of the best setups I’ve seen in a while, and having less concern over a new fundamental input from the Middle East, tariffs, or the FOMC during my trade’s timeframe, I consider this to be a very exciting opportunity.

If you’d like to get your hands on the Stock Forecast Toolbox and see what it can do for you, you can access  a free trial HERE.

And as always, please go to http://optionhotline.com to review how I traditionally apply artificial intelligence, technical signals, volatility analysis, and probability analysis to my options trades. 

If you have any questions, never hesitate to reach out.

Keith Harwood

Keith@OptionHotline.com