Market Backdrop
Stocks are broadly green after a widely expected rate hike. Fed Chair Kevin Warsh's commentary came across as more bearish than expected, which drove selling late the prior day, though prices closed well off the intraday lows and that upward momentum carried into today. It took about 24 hours to digest the news. Treasury markets are responding positively, moving yields lower, which offers short-term relief. The market now expects possibly another hike by late this year or early next year, while the Fed keeps watching conditions. Crude is under some pressure. With these moving parts settled, earnings and market momentum are back in focus.
Visa (V)
Visa's momentum has held over the past couple of months even as banks and financials struggled this week. Visa was left out of that weakness. It gave up a little ground today and over the last few days, tied to the Clarity Act failing to pass. Visa should benefit from the shift to tokenized payment structures, which helps explain why it keeps its upward momentum while other names faltered. I view Visa as a tech play, not a financial one, and have for several years, which is why it benefits from general tech trends.
Technically, the stock trades inside a channel. A trend line runs across the lows in white, duplicated across the highs, and the two match up decently, giving a way to project support and resistance. The counter trend starts at the highs near 385.57, connecting later highs. There is tension between short-term and longer-term patterns. Price now sits right at the bottom of the channel - a possible breakout point for bears, or a support zone for bulls looking for the move up to continue.
Horizontal levels: highs near 386; relative highs near 377; old highs and later lows near 372; recent relative low near 365; and a support zone from about 356 to 358, marking the lows seen after earnings, with repeated lows at 358.
Moving averages: the 5-day at 371.63 and the 251-day exponential moving average. The 5-day (one week) and 21-day (one month) sit on top of each other between 371 and 372, which acted as resistance today - price hasn't broken above yet. That level near 371-372 is a key pivot because two indicators meet there. Watch for a close well above or below it. RSI is slipping below the 50 midline, a bearish sign, but you must wait for the close since intraday fakeouts happen. A confirmed bearish view needs price breaking below the trend line and RSI pushing hard below 50 at the same time.
The volume profile shows a small node near 362 to 364 and another small area near 380, but most trading sits far below current price, so upper levels lack clear information. Visa traded at 369.39.
Trade: A November risk reversal - sell the 360 put, buy the 385 call, done for a slight credit. This puts you in the stock just below 360 if it weakens over the next 60 days, at support I see from a longer-term view, while letting you take part if it breaks above the 386 highs.
Valero Energy (VLO)
Valero is higher on the session even as oil prices fall, back around $100 a barrel and slipping further since the show began. Valero has had an incredible year, driven partly by strong metrics and mainly by its refining business. Refining is challenged right now, and rebalancing that takes years, which should let Valero keep its upward momentum even if crude and crude products sell off.
Technically, Valero, Marathon Petroleum, and Phillips 66 have far outperformed the rest of the energy sector. Valero shows a rising wedge between two boundary lines. It topped at 408.32, close to that level now as the trading day gains steam. There is a high at 373 before a gap up, then a later low, with a repeated ceiling near 351 - the closest horizontal points of interest.
Moving averages are far apart and still diverging: the fastest on top, the slowest on the bottom, a picture of strength. The 5-day EMA at 398.04 is a potential support point for coming days. Slowing momentum would show up as the averages converging, slopes changing, or strong closes below them. RSI supports the upside: an upward-sloping trend line, a break above a downward red trend line, and price in the overbought area poised for new relative highs. Overbought usually signals strength in a trend, but watch for divergence where RSI trends lower while price trends higher.
The volume profile shows clear nodes: 298 to 311, 341 to 355, and a smaller one at 380 to 392 - heavy trading areas matching the range-bound zones. Valero hit a new all-time high today, trading just below $49 (chart price near 490s).
Trade: Buy the stock and write the January 500 call, about $95 above current price. This captures roughly 25% upside over the next four months and can push a tax event into 2027 if shares get called away above 500 in January. Selling that call collects almost $20, lowering the break-even to around 380 - a level with support if the stock weakens or consolidates over the next few months.
Intel (INTC)
Intel is up 8.6% on news it may make chips domestically for SK Hynix (SKH), still unconfirmed by either side. Both fundamentals and momentum point to a possible push to new highs as Intel finds stability and appears to put in a higher low, breaking out of consolidation.
Technically, Intel was range-bound mostly between 82 and 104, or 108 to 110 on the upside if you get granular. Price is closing in on a clean break above these areas. The next upside spot is 117, the high after a gap down with extreme price activity, where it topped twice. Clearing that opens the door to retesting old highs near 142. On the downside, the range bottom is 82, where the gap after the prior earnings on April 23rd began, making a zone of 79 to 82 the key support.
Moving averages show a starting divergence like Valero's. The fastest 5-day EMA pulls away from slower peers. The teal 21-day (one month) is crossing above the 63-day gold line (one quarter), both sitting between 98 and 99 - a golden cross. It is not a strong signal by itself, but an easy visual sign the trend is shifting from sideways to more bullish. RSI surged back above a broken short-term downward trend line and above the 50 midline as price breaks out.
The volume profile is less helpful: most volume sits between 85 and 120, centered around 100 to 110, which price is now clearing. Beware fast-moving prices if it crosses 120 into thinly traded ranges. Intel traded at 109.77, up more than 8.5%, adding to a nearly 200% year-to-date gain, with SK Hynix confirmation a possible further catalyst.
Trade: Because of recent volatility and the chance this is a false positive, use a defined-risk, shorter-dated trade. Buy the October 105/125 call spread, 29 days out - buy the in-the-money call, sell the out-of-the-money call. This gives upside participation with defined downside risk and about a 2-to-1 risk-reward: the cost of the spread versus its potential payout if Intel trades above 125 within the month.
