July
Blog 2026
The U.S. S&P 500 (7499) index market recently made new highs in early June, but continues to trade sideways within a narrow range of 7200 to 7600. I anticipate there is a possibility that the S&P 500 may test Stratos Primary Target of 7792 during the summer, but more likely, towards the end of the year. Up until now, the political uncertainty has not had much effect on the uptrend that was established last year on Liberation Day, when tariffs became less of an issue and the market could focus on earnings. Strong earnings have been able to keep the S&P near all-time highs, but I expect a technical correction over the next four to five months. I am assuming that the uncertainty of the mid-term elections will start to be a major factor into investor sentiment. Also, based on my observation of a seasonal statistical trend, September through November tend to be the weakest months for U.S. investors.
I am raising my Initial Support to 7301, which I expect to be broken soon. This would indicate the possibility of another 2 to 3 step correction. I’m raising my Intermediate Support Level to 7004 and my Primary Support to 6692. I expect a pullback to this level, as this was a Support Level earlier in the year, and became the Initial Resistance Level after the S&P traded under 6400 at the end of March. On a statistical basis, the S&P 500 did not trade 6700 and jumped above it, creating a large gap, which could be filled sometime this year. I am raising my Line in the Sand to 6183, which was previously at 4972 last May. This has been a very strong period simply based on the numbers.
The credibility of the Fed Reserve is still in question. With interest rates moving higher and inflation becoming a major issue for U.S. consumers, I expect the Fed to not raise short-term interest rates. Their goal is to steepen the yield on longer-term securities and reduce their investments. The problem with this strategy is it’s difficult to manipulate short-term rates and keep them low when, in fact, they should be higher to keep up with the Fed’s mandate of employment and inflation control.
If the situation worsens, it will be clear that the Fed has lost its independence when they fail to raise rates. This could have a lasting negative effect on market confidence as long as this conflict of interest exists.
Stratos Investments continues to expect commodity prices to recover through the rest of the year. Gold ($4050) and silver ($57) prices, which made significant highs in the beginning of the year are both down more than expected for the year as well as palladium ($1270) and platinum ($1650). My largest position is copper, which continues to outperform the other metals. This should be viewed as a long-term positive for the global economy as copper is an industrial metal. Because of inflation and higher long-term interest rates, I am expecting a strong recovery in the metal sector and anticipate that the agricultural sector will move higher as costs for fertilizer and energy spiral up creating a strong foundation for future higher commodity prices in general.
I expect the war to escalate in Iran. I was not convinced last month about the cease fire because the terms were unacceptable to the U.S. and would’ve represented a complete loss. The Strait of Hormuz is closed indefinitely. The Iranians continue to ignore their weakness and could further stop the flow of oil ($87) that is currently coming out of the Red Sea. As the war enters a new phase, it’s unlikely energy prices will move lower, even though U.S. production in oil has increased and other areas seem to be benefitting. Any attack on the infrastructure within Iran and surrounding countries could potentially double oil prices, breaking 2008 highs, which I mentioned in the past. My current target is $163 and this is my Initial Target if the war escalates into a bigger regional problem.
Stratos continues to expect U.S. stocks to move sideways for the next few weeks as strong earnings continue to support U.S. stocks. The problem is there’s not enough momentum anymore to push stocks one step higher, in my opinion, even with strong earnings.
With so much strength since April of last year, and no real technical correction during this move higher, a potential three-step pullback to my Primary Support is a reasonable expectation. Because most AI stocks returns have inflated the S&P 500, any technical correction in this area could start the overall market selloff in the S&P 500. For now, enjoy the strength of the U.S. stock market. Good Trading for the Long Term.
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Address: 210 N Stanton St Ste 3 El Paso, TX
Phone: (915) 312-6117
E-Mail: Bernard@stratosoneseven.com
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