CPI Report Now Critical as Bonds Struggle, Investors Grapple With Inflation
Following a cool PPI report, market action is positive but lacks energy.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
Following a cooler-than-expected PPI report, the market action is positive on Monday morning but is lacking energy. Breadth is solid, but there are very few stocks trading at the highs of the day. The Nasdaq 100 QQQ is filling the morning gap on its chart.
It is likely that there will be some hesitation in putting more money to work in front of the CPI report on Wednesday morning. Bonds are still struggling, and interest rates are hitting new recent highs as investors grapple with the issue of a rebound in inflation. That makes CPI very important at this time.
As far as trading goes, I’m in wait-and-see mode right now. There has been plenty of poor action recently, and some damage has been done to the charts. There is a mild bounce, but I want to see stronger technical action before I put more money into the market. We only have about 80 new 12-month highs to 150 new 12-month lows, which illustrates that the market is not too extended in either direction right now.
With Wednesday's CPI report, the start of earnings season and Donald Trump taking office on Monday, there is an unusually high level of uncertainty right now. No one knows how that will play out, but I see no need to rush to put more money to work right now out of fear of being left out.
I am interested in adding to my positions in NVDA NVDA and Meta META, but now is not the time. The goal isn’t to try to time the low point but to look for a setup with the best potential for sustained upside. I suspect that it will be a week or so before their earnings report.
I am also interested in a long list of thinner stocks that are struggling right now primarily due to market conditions rather than fundamental reasons. With stocks like this, it is important to stay patient and wait for market conditions to turn more favorable. Stock with the best fundamentals will bounce back very fast.
The indices are hitting new lows as I write, and I have no interest in trying to buy dips right now.
At the time of publication, DePorre was long NVDA and META.
