6/13/22 Too Little Too Late? Inflation, Budgets, & Tesla

News:

The CPI report dropped Friday morning and roiled the markets.

The key inflation gauge set a new 40-year high revealing an 8.6% increase in prices year over year.

Most notably, food prices are up over 10%.

After the news broke the markets tanked… 

The Nasdaq led the way lower with a decline of 3.5% on the day, and 5.6% for the week. 

Over the weekend the national average price for a gallon of gas exceeded $5 for the first time ever, according to AAA.

Futures are pointing sharply lower this morning … The S&P 500 could enter an official bear market as soon as today.

The federal government has curved spending … According to a report from the office of management and budget, the federal deficit was just $66 billion in May.

That’s a 24% decrease from this time last year.

On the crypto front, Bitcoin^ is in free fall, making new 52-week lows below $24,000 this morning.

On Tesla (TSLA^) watch, the company officially filed paperwork for a 3-to-1 stock split on Friday. Shareholders will have the final say in an August vote.

Technicals:

The bears clearly have the upper hand at the moment.

A close below the yellow line will officially put the S&P 500 in a bear market. 


SPY Daily Candles – Chart via thinkorswim

Futures are pointing to an open near $380 … a retest of last month’s low.

The VIX exploded higher … Advantage bears.

The put-to-call ratio is extremely oversold … Possible bottoming.

Timing:

This week is the long-awaited FOMC meeting. It starts on Tuesday and ends on Wednesday. 

A 50-basis-point hike is widely expected at the conclusion … But with the new hot inflation number, the market is pricing in the possibility of a 75-point hike.

Friday is the second triple witching of 2022…

Expect the contract expirations to fuel volatility.

And don’t forget it’s summer … I’m not expecting much bullish activity until Q4.

Watchlist:

*Low Float
^Open Position

*AERC has resistance at $14
*RDBX is on watch
*LPI has support at $100
*AMR has support at $160
HNRG has support at $6
CBIO has resistance at $1.50
PBTS has support at $1
^HDSN has support at $9
GLOP has resistance at $7
SD has support at $26
VTNR has support at $16
ESTE has support at $20
CTIC has support at $6
BORR has support at $6
HRB has support near $34-35

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