June 4, 2025

 

(SMALL-CAPS COULD SIZZLE THIS SUMMER)

 

June 4, 2025

 

Hello everyone

 

Tariffs worries have been hanging over the markets like a dark cloud.  However, lately, there seems to have been a shift going on.  Rather than cowering under the prospect of what tariffs will do to the economy, it appears investors may have digested the outcome already and are moving on with things. 

So, with that thought in mind, it’s time to shake off the fear and look forward.

The S&P 500 (SPX) is only 3.78% off its February high, after May’s gains.  But other segments of the market have been completely overlooked when it comes to buying the dip this year.

Let’s consider the Russell 2000.  It’s down 7.17% in 2025 and is 15% below its record close seen in November 2021.

Julian Emanuel from Evercore ISI believes now is a good time to dive into small caps. 

Emanuel and his team argue that the month of June, which aligns with the Russell Index rebalance, has historically favoured smaller companies.   He goes on to point out that “when large size outperformance through May had been similarly vigorous as it was in 2025, June seasonality is especially pronounced.”

June is the catch-up month, when small caps will push ahead of large companies.  Emanuel also reminds us that the “case for small-caps outperformance is reinforced by an attractive multiple relative to large caps…

Emanuel says investors can get broad exposure to smaller stocks via the iShares Russell 2000 ETF (IWM).

(After the Jacquie’s Post zoom monthly meeting main presentation on Sunday, I showed set-ups in several charts that could soon break to the upside.  These included: Russell 2000 (IWM), (QQQ), (SPY), and (AMZN).  So, I have included option plays in this newsletter, which you can use if you wish. 

 

(IWM) monthly chart

 

I have drawn support and resistance lines on the (IWM) chart.

The arrow is pointing to a hammer candlestick, or what could be called a pin bar.  This is a very bullish indicator, so we should see a move to the upside in the weeks and months ahead.

Recommendation: 

Stock:   Buy the iShares Russell 2000 ETF (IWM)

And/or

Recommended Options Plays

215/225 call spread

Buy (IWM) out-of-the-money 215 calls

Sell (IWM) out-of-the-money money 225 calls

Expiration: Dec. 19, 2025

Max Profit: 567

Max Loss: 433

Cost = $4.33 or best price.

AND/OR

215/220 call spread

Buy (IWM) out-of-the-money 215 calls

Sell (IWM) out-of-the-money 220 calls

Max Profit = 268

Max Loss = 232

Cost – $2.32 or best price

Expiry = December 19, 2025

The Nasdaq 100 is showing a holding pattern that’s been in place since May 13.  Upon completion of this consolidation, we should resolve to the upside testing the all-time highs – despite all the lingering macro headwinds.

 

 

(QQQ) monthly chart

 

Here, I have also drawn support and resistance lines. You can also see a hammer candlestick or pin bar on this chart too.  And since that pin bar has forme,d the price action has rallied, and should continue to do so, and eventually break through topside resistance and make new highs.

Recommended options plays

545/555 call spread

Buy (QQQ) 545 out-of-the-money calls

Sell (QQQ) 555 out of the calls

Max profit = 543

Max Loss = 457

Cost = $4.57 or best

Expiry = September 30, 2025

AND/OR

550/560 call spread

Buy (QQQ) 550 out-of-the-money calls

Sell (QQQ) 560 out-of-the-money calls

Max Profit = 530

Max Loss = 470

Cost = $4.70 or best

Expiry = November 21, 2025

VISTRA IS ROCKET FUEL FOR AI ($176.02)

Vistra is an integrated power generation and retail electricity company that has positioned itself in a pivotal role to support the AI technology buildout by filling the significant energy demands of AI-driven data centres.  In 2024, Vistra acquired Energy Harbor for $3.4 billion – adding four nuclear power plants to its portfolio.

Vistra has also made investments in natural gas assets as well as solar facilities, which allowed them to enter into power purchase agreements (PPA’s) with Amazon and Microsoft.

I’m looking for Vistra to move past resistance at the $172/$177 zone soon.

 

 

Weekly Vistra (VST) chart

Here I have drawn the support and resistance lines.  I have also shown the divergence on the chart, and you can see that  the MACD has turned and shows a bullish stance. 

Option

Buy (VST) out of the money 180 calls

Sell (VST) out of the money 185 calls

Max Profit = 308

Max Loss = 192

Cost = $1.92 or best.

Expiry = September 19, 2025

 

 

I have not provided an option for the SPX yet; however, the chart shows one example of how price action could play out.

 

Finally, here is a weekly chart of Amazon.  I have also shown support and resistance lines here as well as the divergence on the chart, and the two points make a third pattern, with the third point being the low made in April. Both patterns are bullish.  The MACD has also turned positive on this weekly chart, and the price action is now sitting above the middle line, which was formerly resistance, now turned support.

Option Plays

210/220

Buy (AMZN) 210 out of the money call

Sell (AMZN) 220 out of the money call

Max Profit = 547

Max Loss = 453

Cost = $4.53 or best

Expiry = Oct. 17, 2025

AND/OR

215/225

Buy (AMZN) 215 out of the money call

Sell (AMZN) 225 out of the money call

Max Profit = 602

Max Loss = 398

Cost = $3.98

Expiry = Oct. 17, 2025

 

 

 

Cheers

Jacquie