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Gorman-Rupp’s quarterly earnings of $0.6 per share exceed the Zacks Consensus Estimate of $0.55
Gorman-Rupp reported quarterly earnings of **$0.60** per share, which is higher than the expected **$0.55**. This shows improvement from **$0.54** per share last year. The earnings surprise was **+9.09%**, and the company has beaten expectations in two out of the last four quarters.
As part of the Manufacturing – General Industrial sector, the company reported revenues of **$179.05 million**, exceeding estimates by **2.55%**. Compared to last year’s **$169.51 million**, Gorman-Rupp has only surpassed revenue expectations once in the past four quarters. How the stock moves next will depend on management’s comments about future earnings.
Gorman-Rupp shares fell by **0.1%** this year, while the S&P 500 rose by **8.2%**. The company’s future performance relies on earnings outlooks and estimate revisions. The current consensus is a hold rating, suggesting that the stock will perform like the market soon. The next quarter is expected to see earnings of **$0.55** and revenues of **$173.23 million**.
The industry outlook could affect Gorman-Rupp’s stock. The Manufacturing – General Industrial sector is in the top **14%**. Another company in the sector, **DNOW**, will soon report its results, with expected earnings of **$0.22** per share and revenues of **$614.55 million**.
Given the positive earnings surprise, there seems to be an opportunity due to a rise in implied volatility. However, the company’s history of inconsistent revenue performance tempers our excitement. This pattern suggests that selling out-of-the-money call options or setting up a covered call position might be wise to capture premium while the market absorbs the news.
Broader economic data shows a more cautious outlook than the industry’s ranking suggests. The latest ISM Manufacturing PMI, a crucial measure of sector health, was **48.7** in May, indicating a decline in U.S. manufacturing for the second month in a row. These economic challenges may prevent significant upward movement for the stock, leading us to reinforce a neutral approach.
The stock’s underperformance compared to the S&P 500 signals weakness that one earnings beat may not fix. Historically, similar industrial stocks have shown a pattern of drifting after earnings, particularly when future guidance is weak. Thus, we prefer to avoid buying directional calls and will look for strategies that benefit from the stock staying in a limited range.
Upcoming quarterly estimates predict declines in earnings per share and revenue, which supports our cautious outlook. We’ll also keep an eye on results from DNOW, as a significant disappointment from this industry peer could create negative feelings and increased volatility in the sector. This might offer short-term trading opportunities using puts if their report is weak.
Given these factors, we think strategies that capitalize on time decay and defined price movements are best. For example, an **iron condor** would let traders profit if the stock remains between two specific price points in the next few weeks. This method takes advantage of the strong quarterly report alongside a weak stock trend and uncertain economic conditions.
Silver drops to around $38.84 after hitting $39.53 amid increased risk appetite
Silver prices fell below $39.00 after hitting a 14-year high of $39.53. This drop is linked to an improved risk environment and a strengthening US dollar.
Silver is now around $38.84, showing an increase of nearly 1.70% for the week. This rise is driven by strong US economic data and easing trade tensions, which lessen the demand for safe-haven assets.
Silver is still trending upwards, remaining above the 21-day and 50-day Exponential Moving Averages (EMAs). The Relative Strength Index (RSI) on the daily chart is at 65, signaling a slight pullback without changing the overall trend.
Key support levels are at $38.70 and $38.00, with the 21-day EMA at $37.81 providing additional support. Resistance is found at $39.00 and $39.53, and if these resistance levels are broken, silver could aim for $40.00.
On the hourly chart, bearish pressure is evident with the 21-period EMA crossing below the 50-period EMA. An RSI of 41 indicates weakening momentum, while the Average Directional Index (ADX) at 37 shows that a trend is still in place.
Silver acts as a store of value and a hedge. Its price is influenced by factors like interest rates and the US dollar. Demand comes from various industries, especially electronics and solar energy, significantly influencing prices in the US, China, and India.
Silver prices often align with gold prices since both are seen as safe investments. A high Gold/Silver ratio could indicate that silver is undervalued.
We interpret the recent decline from a multi-year high not as a trend reversal but as a healthy pause. The daily RSI indicates a cooldown, allowing the market to regain momentum before possibly rising again. Traders should monitor the support levels at $38.70 and $38.00 for potential long positions.
Strong demand fundamentals create a solid price floor, mitigating worries about a recovering dollar. The Silver Institute recently predicted that global demand will hit 1.2 billion ounces in 2024, the second-highest level ever, driven by strong industrial needs for solar panels and electronics. This demand suggests that price dips due to changing risk sentiments may present good buying opportunities.
However, we must acknowledge the short-term bearish signals on the hourly chart. The recent slowdown in the May 2024 US Consumer Price Index (CPI) has not ensured immediate interest rate cuts, keeping the dollar strong. This situation justifies using hedging strategies like buying put options to protect existing long positions from potential declines toward the 21-day EMA.
Examining the relative value, there is a strong case for silver in the long run. The current Gold/Silver ratio is around 78, which is historically high. For reference, it exceeded 100 during the 2020 crisis, before silver significantly outperformed gold in the recovery. We believe a similar situation could occur again, allowing silver to catch up once interest rate uncertainties settle.
Given the strong long-term outlook but short-term challenges, we don’t recommend chasing prices right now. Instead, using options to structure trades can take advantage of this scenario. Buying call options with strike prices near the key $40.00 level during dips provides a low-risk way to profit from the next potential upward move.
Trump Accounts spark lively discussions among retirement and savings professionals about alternatives to IRAs.
Trump Accounts, introduced through the One Big Beautiful Bill Act, are starting conversations among savings and retirement experts. These investment accounts aim to compete with Individual Retirement Accounts (IRAs).
These accounts include a $1,000 government deposit at birth for children born between 2025 and 2028. Additionally, they allow yearly contributions of up to $5,000. Contributions can be made by parents or other entities, but investments are limited to low-fee index funds.
Tax Structure and Investment Growth
The tax structure is similar to Roth and Traditional IRAs, with contributions made after taxes and withdrawals taxed as well. Funds can be accessed starting at age 18, following IRA tax rules. However, there are penalties for early, non-qualified withdrawals. If invested in low-cost index funds from birth, these accounts can grow significantly, thanks to compounding interest. For example, an initial $1,000 with $200 monthly contributions could exceed $250,000 in 30 years, assuming a 7% annual return. While these accounts could benefit long-term savings, they add complexity to an already diverse savings landscape. With more than ten different U.S. savings options, including IRAs and 401(k)s, the introduction of another choice could confuse savers. Unlike IRAs, Trump Accounts allow contributions from birth. However, their annual limit of $5,000 is lower compared to IRAs, which allow $7,000 for younger contributors.Fiscal Policy Implications
Although these accounts provide early access, existing options like 529 plans and Roth IRAs offer more targeted benefits. The complexities and limited investment choices suggest that Trump Accounts should be used carefully alongside existing options. We believe that the introduction of these accounts signals future fiscal policy changes rather than focusing solely on retirement savings. This plan may lead to increased government spending, potentially raising the national debt beyond its current level of over $34 trillion. Such changes directly impact our views on the long-term value of the dollar and U.S. debt. Increased government borrowing to fund these programs could heighten inflation, which is currently around 3.4% according to the latest Consumer Price Index. Hence, we are tracking derivatives linked to interest rate expectations, like Secured Overnight Financing Rate (SOFR) futures, to catch any shifts in sentiment. If this proposal gains political support, we might see a more hawkish Federal Reserve stance. The plan specifies investment in low-fee index funds, which would greatly benefit asset management companies dominating this sector. We will monitor activity related to firms like BlackRock and State Street, as they could experience substantial inflows if this becomes law. A rise in call option volume or increased implied volatility for these stocks might indicate that the market is starting to price this potential. The mandated investment in broad market indexes, even if it takes years to implement, creates a hopeful narrative for the future. Historically, consistent buying from programs like 401(k) contributions has provided a safety net for the market during downturns. We may cautiously consider long-dated call options on the S&P 500, speculating that this future demand could help stabilize the index. Finally, any major policy proposal linked to a presidential candidate carries uncertainty, which drives market volatility. As election season heats up, we expect implied volatility to rise, following a trend seen in past elections. Monitoring the VIX and the term structure of VIX futures will be essential for assessing market anxiety and preparing for potential price movements. Create your live VT Markets account and start trading now.US durable goods orders see a 9.3% decrease, exceeding expectations for a larger decline
Durable Goods Orders in the US fell by 9.3% in June, totaling $32.1 billion and reaching $311.8 billion overall. This drop was better than the anticipated 10.8% decrease and followed a revised 16.5% rise in May.
When we exclude transportation, new orders stayed the same. However, if we leave out defense, they decreased by 9.4%. The decline was mainly due to transportation equipment, which dropped by $32.6 billion or 22.4%, bringing its total to $113.0 billion.
Market Reactions
After this report, the US Dollar Index stayed strong, trading around 97.80 with a daily gain of 0.3%. We view the 9.3% decline in durable goods as a sign of market fluctuations rather than an economic collapse. This number was surprisingly better than what the markets expected. Importantly, new orders remained steady when we exclude the unpredictable transportation sector. The 22.4% drop in transportation is where traders should concentrate for market opportunities. Historically, big orders from events like the Paris Air Show can boost numbers one month, only to see a predictable decline the next. This points to examining options on major aerospace and defense companies such as Boeing or RTX Corporation for short-term strategies.Investment Strategies
The strength of the US Dollar after the report indicates that the market is not overly concerned about the headline figure. The steady core data takes some of the pressure off the Federal Reserve, suggesting they won’t need to act quickly. We recommend strategies that benefit from a stable or slightly stronger dollar, like call options on the Invesco DB US Dollar Index Bullish Fund (UUP). To support this view, we can look at the latest data from the Census Bureau, released on May 24, 2024. It showed that durable goods orders increased by 0.7% in April, continuing a trend of exceeding expectations. This pattern suggests that the business environment remains solid, despite monthly fluctuations. Recent strength, particularly the 0.3% rise in non-defense capital goods orders (excluding aircraft), indicates ongoing business investment. This measure is essential for assessing business spending plans, and its robustness supports a positive outlook for industrial sector ETFs like XLI. We recommend positioning for consistent, steady growth instead of a sharp decline. Create your live VT Markets account and start trading now.California regulator bans Tesla from testing or transporting the public in autonomous vehicles, causing shares to drop
In late 2021, Tesla moved its headquarters from Palo Alto, California, to Austin, Texas. This change was mainly due to high living costs and tougher regulations in California. The new location is beneficial because it’s close to Gigafactory Texas. Even after the move, Tesla still has a strong presence in California, with its Fremont factory and engineering teams. The relocation mainly affects the corporate headquarters and long-term strategy.
Market Reaction To Regulatory Announcement
The recent decision from California regulators brings a lot of uncertainty, which we see as an opportunity. The stock’s quick drop from its peak of $323.63 shows how sensitive it is to news. Derivative traders should get ready for more volatility in the weeks ahead. The symmetrical triangle pattern on the hourly chart supports our belief that movement is coming. This pattern indicates that energy is building for a breakout—either above the upper trendline or below the lower one. We think this technical setup is influenced by the recent news. This isn’t happening in isolation. Tesla’s first-quarter deliveries fell short of estimates, dropping to 386,810 vehicles. Additionally, California’s DMV clarified that the current driver assistance system is only Level 2, not the full autonomy that Tesla markets. These facts strengthen the bearish outlook. For a bullish reaction, a rise above the $342 mark could trigger a shift. We are keeping an eye on the August 8th robotaxi unveiling, which could push the stock higher. Traders might consider using call options to benefit from this possible surge.Potential Trading Strategies
On the other hand, if the stock drops below the rising trendline around $301, it would indicate more weakness. Ongoing regulatory issues or any letdown from the upcoming reveal could easily drive the price down. In this case, buying put options would be a suitable strategy. Historical data shows that the stock experiences high volatility during significant events. After the disappointing delivery report in April 2024, shares fell about 5% in one day. This history suggests that any clear news, good or bad, could lead to a sharp price move. Given the mixed signals from negative regulatory news and a key product reveal on the horizon, we believe a volatility strategy is wise. A long straddle—buying both a call and a put option with the same strike price—could benefit from a strong price swing in either direction. This approach protects you from mistakenly guessing the direction of the breakout. Create your live VT Markets account and start trading now.Gold declines for the third straight day due to improved risk appetite and a stronger US dollar
Gold’s price is falling, with XAU/USD below $3,330, down over 1%. This dip is attributed to rising US Treasury yields and lower demand for safe-haven assets. In June, US Durable Goods Orders fell by 9.3%, which was less than anticipated but still raises concerns about economic growth.
The easing of global trade tensions is contributing to Gold’s decline. US President Donald Trump is working on trade deals, including discussions with China scheduled in Stockholm, hoping to extend the current tariff pause. If these negotiations fail, tariffs may rise, impacting market sentiment and Gold’s demand.
Economic Indicators Impacting Gold
US Initial Jobless Claims dropped to 217,000, indicating a strong labor market and easing pressure on the Federal Reserve to cut rates. This situation supports the US Dollar, putting further downward pressure on Gold. Market predictions show a 62.3% chance of a rate cut in September. Gold’s technical outlook warns of a possible break below key support levels. XAU/USD is around $3,327, and if it stays below certain points, it could hit the $3,200 range. If it manages to reclaim the $3,340 level, it may signal positive momentum toward recent highs. Tariffs, which are taxes on imports meant to protect local businesses, have differing opinions on their economic effects. Gold faces challenges due to rising US Treasury yields, which have recently climbed back toward 4.5%. Recent data, such as Initial Jobless Claims remaining steady at 222,000, points to a resilient economy, decreasing the demand for safe-haven investments. This strength in the US economy supports the dollar and complicates conditions for Gold.Gold’s Potential Amid Rising Geopolitical Tensions
Despite the challenges, Gold still holds potential, particularly as global trade tensions increase. The recent announcement from the White House about new tariffs on Chinese electric vehicles and solar cells signals a renewed escalation. Historically, geopolitical uncertainty has led capital to flow toward Gold, as demonstrated during the 2018-2019 trade war when Gold prices rose over 20%. Market attention is geared toward future actions by the Federal Reserve, as interest rate cuts remain a possibility. The CME FedWatch Tool shows traders are pricing in a nearly 65% chance of a rate cut by September, a figure consistent with previous estimates. Lower rates would reduce the opportunity cost of holding non-yielding Gold, potentially spurring significant buying activity. Given this mixed outlook, derivative traders should think about strategies that manage risk while positioning for potential breakouts. One option is to buy put options with a strike price below the $2,300 support level to guard against a downturn fueled by economic strength. Conversely, buying call options above the $2,350 resistance could capture gains if trade tensions or a dovish pivot from the central bank propels Gold higher. Create your live VT Markets account and start trading now.Durable goods orders in the United States fell by 9.3%, which is better than the expected 10.8% decline.
United States durable goods orders dropped by 9.3% in June, which is better than the expected decrease of 10.8%. This number helps us understand the state of the manufacturing industry.
The EUR/USD currency pair remains under pressure, trading near the low-1.1700s. The GBP/USD is facing similar issues, falling to a weekly low around the 1.3420 area. This decline in the British Pound is due to weak Retail Sales data from the UK in June.
Gold Prices Decrease
Gold prices have fallen to weekly lows near $3,330 per troy ounce. This drop is linked to rising U.S. yields and a better risk outlook ahead of U.S.-China talks. In cryptocurrency markets, Bitcoin has dipped, hitting an intraday low of $114,723. However, signs of recovery are starting to appear. The Federal Reserve is under pressure regarding its delay in rate cuts amid ongoing tariff uncertainties. While the economy shows strength, there are growing concerns in the labor market. Trading foreign exchange carries significant risks due to high leverage. However, you can manage these risks by understanding your investment goals and seeking advice when needed. Always critically assess the accuracy of market-related information due to inherent risks.Current Financial Trends
Despite the better-than-expected but still weak durable goods orders, the manufacturing sector shows continued weakness. The latest ISM Manufacturing PMI data confirms this with a reading of 47.6 for August, indicating ongoing contraction. Traders may consider buying puts on industrial sector ETFs to hedge against or profit from this sustained weakness. The dollar’s strength against the Euro and British Pound is a trend likely to continue, especially since U.S. inflation has been more persistent than in Europe. With the U.S. 10-year Treasury yield above 4.2%, the interest rate difference favors the dollar. We think buying call options on the U.S. Dollar Index is a smart way to benefit from this trend. Gold’s decline is directly linked to rising real yields, a pattern that typically impacts non-yielding assets. As long as risk sentiment remains stable due to international negotiations, gold will likely face challenges. Selling futures or using bear call spreads on gold could be a wise approach in this environment. The significant drop in Bitcoin highlights its volatility, which options traders can take advantage of. The market is currently swaying between fears of regulatory action and hopes for a spot ETF approval. We recommend strategies like straddles, which can profit from large price movements either way, allowing you to trade this uncertainty without predicting a specific outcome. The Federal Reserve’s challenges are growing with signs of a cooling labor market, as seen with the recent rise in the unemployment rate to 3.8%. This uncertainty adds volatility to interest rate-sensitive markets. We suggest closely monitoring derivatives tied to the federal funds rate to prepare for any unexpected changes in monetary policy. Create your live VT Markets account and start trading now.Crude oil futures close at $65.16, marking a decline with potential resistance at $66.96.
Crude oil futures closed at $65.16, down by $0.87 for the day. Earlier this week, the price fell below the 100-day moving average but managed to stay above it, indicating weak bearish momentum.
As the new trading week starts, sellers want to keep prices below the 100-day moving average to strengthen the downside trend. If prices drop below the swing area low of $63.61, it could boost selling momentum and increase seller confidence.
Resistance Levels
On the upside, resistance sits at $66.96, with another key point at the 200-day moving average of $67.99. These levels will challenge any potential price increases. The market currently shows indecision, with sellers unable to produce a clear breakdown. A recent report from the Energy Information Administration revealed an unexpected increase in inventory of 3.7 million barrels, highlighting ongoing supply pressure. This data supports the technical weaknesses seen in recent price movements. For traders looking for a downturn, buying put options with strike prices below the $63.61 support level could be a smart choice. This strategy will yield profits if worries about a global economic slowdown, intensified by recent data showing China’s manufacturing PMI dropping to 49.5, lead to lower oil prices. Given the current market uncertainty, this defined-risk approach makes sense.Prepared For Upside
However, we should also be ready for possible upside surprises, especially due to geopolitical events. Historically, tensions in the Middle East or unexpected production cuts from OPEC+, like those in late 2022 that triggered a price rally, can quickly shift the trend. Therefore, buying call options with strike prices above the critical $67.99 resistance level could serve as a good hedge or speculative strategy. The market is currently coiled, suggesting that a breakout could happen, though its direction remains unclear. The CBOE Crude Oil Volatility Index (OVX) is near a relatively low 30, making option premiums reasonably priced. This creates an opportunity to set up a long strangle, which involves buying both an out-of-the-money call and put, to benefit from significant price changes in either direction. Create your live VT Markets account and start trading now.Next week brings a wave of earnings reports and economic indicators from multiple sectors.
A busy week is coming with important economic data releases and earnings announcements from major tech firms like Meta, Microsoft, Apple, and Amazon. Key reports include the FOMC rate decision on Wednesday at 2 PM, followed by a press conference, and US employment data on Friday at 8:30 AM.
Other releases include Australia’s CPI on Tuesday night and various announcements on Wednesday. The ADP nonfarm payroll change is expected to show a gain of 75K this month, up from a loss of 33K last month. The advance GDP for Q2 is estimated at 2.5%, a bounce-back from last quarter’s -0.5%. Both the Bank of Canada and the Bank of Japan are expected to maintain their rates. On Thursday, Canada’s GDP estimate is projected at -0.1%, while the US Core PCE price index estimate is +0.3%.
Earnings Announcements
This week, major tech companies will report their earnings, including Meta, Microsoft, Apple, and Amazon, along with UnitedHealth, Boeing, Merck, and Visa. Waste Management will release its earnings on Monday after the market closes, while significant announcements from UnitedHealth, PayPal, Boeing, and Merck will occur before and after market close from Tuesday to Friday. We anticipate a period of heightened event risk, leading to increased market volatility. The CBOE Volatility Index (VIX), known as the market’s “fear gauge,” is currently around 14, which is low and likely to change. This indicates that options pricing may not yet fully account for potential price fluctuations. Derivative traders should be ready for a rise in implied volatility, especially in options related to major tech companies and broad market ETFs like SPY. For example, options markets are pricing in an estimated 8.5% post-earnings move for Meta, a significant increase that will raise premiums leading up to Wednesday’s close. We expect the cost of protection and speculation to rise as these key events approach.Federal Reserve’s Meeting
The Federal Reserve’s meeting is the main event of the week. Traders should pay more attention to the tone of the press conference after the rate decision. Historically, the S&P 500 has fluctuated nearly 1% on Fed decision days, but the key detail for option sellers is the drop in volatility once uncertainty is resolved. Recent inflation data, like the May CPI at 3.3%, came in lower than expected, so any hawkish surprise from Powell could lead to a significant market reaction. For those who think the market may be overestimating potential moves, selling premium could be a good strategy. By using strategies like iron condors or short strangles on stocks like Apple or Amazon, traders can benefit if the stocks move less than the expensive options predict. This approach bets that the market will be calmer after the announcement than it was leading up to it. On the other hand, since the recent market gains are heavily concentrated in the “Magnificent 7,” there’s a chance for a swift repricing if any disappointments arise. Buying simple puts or calls on these stocks is a straightforward way to bet on larger-than-expected moves, especially if weak guidance or a big earnings miss occurs. A trader expecting a negative surprise from Microsoft could see strong returns if its results don’t support its high valuation. Finally, don’t get too relaxed after the tech earnings and central bank decisions. The U.S. employment report on Friday is still a key factor that could either confirm or completely overturn the market’s initial reactions. A surprisingly strong jobs number and wage growth could reignite inflation fears, affecting a market that thought the week’s main risks had passed. Create your live VT Markets account and start trading now.June’s durable goods orders in the United States surpass expectations at 0.2% instead of 0.1%
In June, orders for durable goods in the United States, not counting transportation, rose by 0.2%. This was better than the expected increase of 0.1%.
The EUR/USD exchange rate stays above 1.1700, although it’s facing slight downward pressure. Meanwhile, the GBP/USD is aiming for the 1.3400 level after weak retail sales data from the UK.
Gold prices are declining for the third day in a row, hitting weekly lows around $3,330 per troy ounce. The strength of the US Dollar and mixed yields are leading to a bearish outlook for gold.
