10/13/22 Inflation … How High is Too High?


Yesterday, markets spent the vast majority of the day trading in positive territory.

But in the final minutes, buyers stepped aside, and all four indexes fell into the red. Each index posted a marginal loss.

  • Dow Jones -0.1%
  • Nasdaq -0.1%
  • S&P 500 -0.3%
  • Russell 2000 -0.3%

There were two news items we were watching yesterday…

  1. The FOMC Minutes came out with few surprises. From the minutes…
  • Expect a “more restrictive policy” to combat inflation.
  • Easing isn’t out of the question.
  • Fed officials want to “calibrate the pace of … tightening” to balance with “adverse effects.”
Image from Yahoo! Finance
  1. The Producers Price Index (PPI) data release revealed inflation remains high. For wholesale prices…
  • +0.4% month-over-month
  • +8.5% year-over-year
  • The numbers came in above Wall St estimates, but the market showed little reaction.

Sector Round-Up

The sectors were mixed again. 3 of the 11 ended the day higher.

  • Energy (XLE) +0.8%
  • Consumer Staples (XLP) +0.5%
  • Consumer Discretionary (XLY) +0.3%

The biggest losers were a little surprising. These sectors had been near the top this week…

  • Real Estate (XLRE) -1.3%
  • Utilities (XLU) -3.3%

Each of the remaining sectors ended less than 1% lower.


Markets are at a tipping point.

VIX Daily Candles – Chart via thinkorswim

The VIX is at resistance. The SPY is at support.

The technicals have given the market a perfect turning point.

The question now is, will the news cycle support it?

Our other signals

But this morning, all eyes are on the latest headline inflation number…


At 8:30 this morning, the Bureau of Labor Statistics will release the latest CPI headline inflation number.

The market will react to this number. But what the number will be and how the market will react is a guessing game.

Our advice: watch the market, not the data. The market’s reaction is more important.

On a final note, the unofficial start of earnings season is tomorrow. Several big banks are reporting premarket Friday morning.


*Low Float
^Open Position

*HAPP is on watch
*PEGY support at $5
*TC support at $4.50, resistance at $5.50
*^RELL support at $18
*RVPH support at $3
*WNW support at $1.20
FNGR support at $8
HROW resistance at $13, support at $11
IMUX on watch
ETNB support at $7.50
IMVT support at $9, resistance at $10
DCPH support at $17
RVNC support at $28
VIST support at $10.50
PRVB resistance at $8
ADEA support at $9
HLIT support at $13
CANO resistance at $9

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