Trump Flattens Inflation Optimism With Tariff Threats
Also, an update on my totally rad SRAD trade.
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The S&P 500 is trading around flat on Thursday morning as Trump's comments about imposing unilateral tariffs offset the positive news of a softer-than-expected producer price index report. Like the consumer price index report, PPI surprised to the downside, but there is a loud chorus of economic bears that keep singing that it is only a matter of time before the impact of tariffs will be felt and we will see upside pressure on prices.
Many Wall Street pundits are convinced that some negative impact from tariffs is coming, but Goldman Sachs has reduced the odds of a recession to 30% from 35%. On the other hand, continued unemployment claims are trending higher and show that the jobs market is moving in the wrong direction.
What we end up with is a market that is holding up well because the data has been very good but a hesitancy to chase things higher because of the worry that there is poor economic news on the horizon. It seems that it is just a matter of time before there will be an economic report that confirms these worries, but no one wants to miss out on further upside while they wait.
This makes for a difficult market to trade. Rather than aggressively seek new buys, many traders are focused on protecting gains and waiting for better charts to develop.
A Totally S-RAD Trade
I discussed Sportrader Group SRAD on April 24, when it was trading around $22.36. Since then, it has jumped 13% to $25.38 and is breaking into a new closing high. I have not sold any of my positions and am looking for an opportunity to add based on the strong technical action and a target price of $30. This is a good example of taking advantage of a situation where the market mispriced a stock with solid fundamentals.
I am looking hard for more trading opportunities, but I don't expect to find much of interest until we have a decent pullback. We need to shake things up and see a higher level of volatility if we are going to find better trades.
At the time of publication, DePorre was long SRAD.
