Market Backdrop
The market trades at record high territory. Strong tech earnings came in across sectors: software from Salesforce (CRM), chips from Nvidia (NVDA), and cybersecurity from CrowdStrike (CRWD). This broad tech strength is also the problem - tech is the only S&P 500 sector up on the day. My stance is long-term bullish but cautiously so, because inflation and interest rates still drive where this market goes.
Salesforce (CRM)
Shares jumped more than 21% on earnings, tied largely to the "Agentforce" concept. I expect it to go higher. For a year investors feared AI would kill traditional software firms like CRM, worried companies would build their own CRM systems. Major companies do not want to build their own, and when they do, they prefer to build on Salesforce's backbone with its customization.
The numbers back this up. Q2 revenue was $11.35 billion, up 11% year-over-year. Agentforce and Data 360 approached $3.9 billion, up more than 200%. Non-GAAP operating margin was 34%. Management said none of the dire predictions about the end of software apply to Salesforce.
Technically, the stock was trapped below its 200-day moving average since March 2025. This past week it popped above that average, and today it lifted further off it, which signals the trend is changing. The stock is on pace for a 71% rally off recent lows near 146 hit only a couple of months ago.
Key levels: 228 marks where a past gap began (potential support on a pullback); 219 is another low before that gap; 210 was tied to an earlier gap and prior highs. To the upside, resistance sits near 252 (a gap and breakdown point) and 267 (a series of prior highs). The 5-day EMA sits around 220; these lagging averages need time to catch up after such a fast move. RSI is 79.6, above the 70 overbought threshold, which in a trending market signals strength. Volume nodes: 225-231 (watch on a retreat), 239-247 (largest nearby, already crossed), and 253-260.
Trade: avoid chasing, since call options are inflated after the big move. Use a bull put spread expiring November 20, 2026. When measured (stock near 930 at the open, before it rose another 20 points), buy the 190 strike near 330 and sell the 200 near 530, for a net $2 credit. Risk is $10, technically $8 after the $2 credit. If the stock stays above 200, you pull in about 25% over 85 days - roughly 100% return if repeated four times a year. Because the stock has already run, consider adjusting up 20 points: buy the 210, sell the 220. You win if it rises or goes sideways, with 30-40 points of margin, and about $50 above break-even even after the adjustment.
Dollar General (DG)
Shares rose 6% on a beat-and-raise quarter. It is a discount store with about 20,000 locations selling food, household products, and health goods. The real story is that Dollar General is a play on the American consumer. When people feel pressure from inflation, fuel costs, and elevated expenses, they do not stop spending on needed products - they trade down. The back-to-school season, Black Friday, and Christmas shopping are all coming up.
Sales increased 5.2%, same-store sales rose 3.5%, and customer traffic increased 2%. Rising traffic matters - it shows more people are choosing Dollar General over Walmart (WMT), Target (TGT), or online through Amazon (AMZN), so gains come from more shoppers buying more, not just higher prices.
Technically, the stock is forming an inverse head and shoulders, a bullish reversal pattern - one shoulder, then the inverse head low, then a matching shoulder under a consistent ceiling. Today's move pushed it back above the 200-day moving average. If the breakout holds, a move toward 160 is possible.
A shorter-term view shows a range from 114 to about 131. Price broke out of a symmetrical triangle (lower volatility) with an extreme post-earnings breakout, but has not yet crossed above the consistent ceiling near 131-132 - the last threshold before runaway price action. Upside levels: 140 (old low and later high) and 144 (gap level). Downside support: recent lows near 118 and the range bottom near 114. Moving averages are now accelerating and pulling apart, which shows an improving trend; lows came near the 5-day EMA around 125.40. RSI matched the triangle in price and is breaking above its downward trend line, heading toward 70. Volume nodes: 123-126 (crossed above) and a smaller one at 133-138.
Trade: a medium-term play out to December 18, 2026. The 110 strike went for about $24, pushing break-even to 134 - just past the resistance near 132. If price gets two points above resistance, you are at break-even, with until December to do it; earlier moves put you in profit. If it stalls or pulls back, sell the 135 (going for about $9) to turn it into a covered call and recover roughly 35-40% of trade cost - a back-pocket adjustment if time works against you.
HP (HPQ)
Shares fell more than 5.5% after earnings. The numbers looked good but were less impressive once the tariff impact was removed. Revenue reached a record $15.7 billion, up about 13%, but some of that came from a tariff refund - money that should not have left the company in the first place, showing how political decisions affect these firms.
This is not the first time HPQ had strong earnings, popped, then sold off back to the moving average. This time it skipped the pop and went straight to the pullback. What is positive: there is real demand for better, higher-quality computing, especially for AI processing. Management said the PC volume decline came from people holding off on upgrades, partly because higher memory prices raised unit costs and made buyers wait. At some point people cannot wait and will prefer higher-cost, high-quality machines, which helps HPQ once memory costs come down, and they will not stay elevated forever. I view this as a chance to scale into the stock rather than run from it.
Technically, the stock is much improved from the day's low of 26.73, down from yesterday but off a surge that reached about 30.83; the high 32.19 also stands out. A relative low below today's intraday lows sits at 26.05. The downward-sloping channel is still in play, though price recovered back above it. Moving averages: near the 21-day EMA at 28.85, the 5-day just above at about 29.50, and the gold 63-day quarterly EMA near 26.40 as possible support. RSI is trending lower just above the 50 midline; a break below 50 would shift momentum bearish. Volume nodes: 27.50-28.50 (holding above) and a smaller 26.50-27, near today's lows, as potential consolidation areas.
Trade: duration out to January 15, 2027, giving 141 days. The 23 strike went for 550 at the open and is now about 650 - up roughly a dollar as the stock came off its gap-down bottom. Using the original numbers, break-even is 28.50. The stock traded as high as $32 recently, so returning to that level or at least break-even before January 2027 is not improbable. The wrong-side exit: if the stock breaks below the 50-day moving average, cut the loss. It sold off to that level this morning, then bounced off it; that level must hold, and if it breaks, exit and move on.
