The Macro Backdrop
Before turning to individual names, it's worth framing the broader market environment. The current action keeps coming back to trade. When you look at global trading — imports and exports — that has to stay front of mind right now. In spite of the ongoing conflict in the Middle East, the dominant concern is cost, and costs are soaring. That cost pressure is going to affect everyone on a larger scale.
There is some rotation happening: small caps are starting to pick up the slack. But the harder question is whether the mega caps still have room to run. Is there really a move to the upside left? Is there a lot of juice left in the tank at this point? The view here is that there is still a lot to go, but it's important to keep in mind all the cost associated with bringing goods into the United States. Will tariffs impact that? Will AI impact that? AI in particular is enabling easier outsourcing, and these forces feed directly into the analysis of the three picks below.
Caterpillar (CAT)
The Trade Thesis
Caterpillar has strong momentum on its side — up more than 20% in the past month and up close to 90% year to date. The question of whether that momentum continues comes with a near-term caveat: expect some near-term resistance, as is typical with this stock.
There's an interesting narrative shift at work. Caterpillar is one of those stocks that almost seemed to "forget it was a construction company" — it has just been taking off, going up and up, with much of the growth facilitated by AI. The forward expectation is roughly 12 to 14% growth over an 18-month time period. That's slower than the phenomenal growth seen in previous years; the days of that extraordinary expansion are behind it.
Even so, in terms of having a quality stock in your portfolio, Caterpillar should be part of everyone's holdings. It's high quality, pays a decent dividend — nothing out of the ordinary on the income side — but the growth speaks volumes about where the stock is heading. The expectation is that the trend continues year over year, and unless something dramatic happens, the strategy is to continue making money and quietly accumulate the shares.
The Technical Picture
On the charts, the trend has not only continued but has accelerated and become steeper. In the near term, resistance is the key idea. There was in fact resistance today right at the 1055 level, and the stock broke through that level on the session.
However, a warning sign appears in the RSI: momentum is backing off. The advance is happening in a "coasting higher" manner — price is being pushed to the upside, but without a lot of force behind it. Looking at the longer-term trend, each time the price broke out of a major resistance level — first 795, then 935 — the trend steepened further. That looks attractive on a chart, but it ultimately becomes a parabolic move, which is not necessarily sustainable over the much longer term.
So while the longer-term trend may very well continue, from a technical perspective it's quite likely to find a pullback and build a base of support — perhaps back at the 935 level it broke out from, or possibly all the way down to 795.
The reasons behind the climb are worth keeping in view: construction demand, AI and chip buildout, mining demand (a primary driver for Caterpillar), and Caterpillar's China business, which has been a significant portion of its revenue stream. But the bearish divergence in the RSI bears watching. On the day, Caterpillar was having an up day, trading up 3.5% at around 1069.80, so the momentum was at least continuing through the session.
SpaceX (SPCX)
The Trade Thesis
SpaceX is a very interesting company at the moment, and the framing here is that it could be a quick turnaround where you can pick up profits at high points. The position was first purchased in the aftermarket at around 155, and it's been a ride since. Anytime it dips, there's an opportunity to make somewhere between 10 and 20 points — and that's a trade worth taking every single day.
A key supporting factor is a highly favorable regulatory environment. When you have the wind at your back — the wind in your sails helping you along — why not take advantage? The core idea is that you can pick up double digits with SpaceX in a very short period, talking 12 months or less. And if you need to exit at, say, three or four months, don't be afraid to do it.
This is explicitly not a long-term hold. Some shares will be held longer term if the fundamentals continue to improve, but at this point it's "potluck" — you don't know what's going to happen. Still, the overall stance is very optimistic on the stock. Today, SpaceX was back above 170, up more than four and a half percent, after getting very close to its IPO price of 150.
The Technical Picture
With limited trading data — only about 20 days of history — the technical read is necessarily cautious. The analogy: when you launch a rocket, it has to establish some stability, and there isn't a lot of stability in this chart yet. There is a little, and it needs to be put into context.
Over this 20-day period, a fairly wide base has been building off the 164 resistance level, where the stock had been sitting in the last couple of days. The stock is now breaking out of that range in the last three hours of trading — and each candle on this chart represents one hour. Taking the symmetrical distance of that pattern, the near-term target works out to around the 180 mark. That's still well short of the highs; the stock was up around 230 on the big parabolic move it made in its first couple of days.
The 180 target is not a guarantee. There is momentum behind it, but if it starts to move to the downside, the current area is a pretty solid level of support. The next level below that is down at the IPO price (150) or lower — and if it breaks below that, as the memorable line goes, "in SpaceX, nobody can hear you scream."
JP Morgan Chase (JPM)
The Trade Thesis
For context, there had recently been a note out on big banks cutting a number of ratings — though JP Morgan Chase was notably not included in that downgrade.
The analogy for JPM is Bugs Bunny and the tortoise: JP Morgan is the tortoise, and slow and steady wins the race. The bank has plenty of businesses bringing in decent revenue, including wealth management (always worth watching), plus higher moves to the upside in both investment banking and regular banking.
Banks are conservative by nature and aren't going to surge dramatically, but the expectation is 8 to 12% over an 18-month period. There's plenty of opportunity here, and holding this high-quality stock gives you a more rounded portfolio. The broader point: you need to own some financials. Although the sector is much maligned and JPM is "moving like a turtle," you just have to stick with it — it's going to work out.
The Technical Picture
JP Morgan Chase is pretty much flat on the year — there's been some movement, but overall only marginally higher. The question is whether the tortoise could in fact pass the sleeping hare, and the technicals suggest it could.
Looking at the pattern building over roughly the last six months, this is what some technical analysts would begin to call a cup and handle. The stock is bouncing off support right at the 326 level, which would establish the handle portion of the cup. There's bearish divergence in play, which makes the upcoming earnings announcement the critical moment for pushing the stock to the upside.
Using typical cup-and-handle analysis: treat the current level as the rim of the cup, measure the base of the cup, draw it to the rim, then double that distance and project it to the upside. On that basis, JP Morgan Chase could make a nice move higher from here.
Summary
Across all three names, the through-line is quality holdings positioned against a backdrop of trade pressure, soaring costs, tariffs, and AI's influence. Caterpillar offers steady, if decelerating, growth that should be in every portfolio — but watch for a parabolic move cooling off and a possible pullback. SpaceX is a high-volatility, short-horizon trade with favorable regulation and double-digit upside potential, balanced against real downside risk toward its IPO price. And JP Morgan Chase is the conservative tortoise — modest 8-to-12% expected returns, a cup-and-handle setup, and the case that every portfolio needs some financial exposure.
