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7/14/22 Did Inflation Just Peak?

News:

9.1% — Prices of everyday items rose 9.1% from last year … The biggest increase since November 1981.

When the CPI data dropped, the markets reacted violently … dropping as much as 3% from premarket highs.

But buyers showed up and pushed the markets into positive territory midday.

Ultimately markets settled slightly lower. The Dow fell 0.7%, and the Nasdaq’s decline was limited to just 0.2%

Notably, the Consumer Staples and Consumer Discretionary sectors were the only sectors to end the day in positive territory.

Did Inflation Peak?

The cost of fuel is a main driver of inflation. And the price of gasoline is down more than 8% from its peak of $5.02 per gallon a month ago today.

Gas price table from AAA

If energy prices continue to fall, it’s fair to assume that the JP Morgan (JPM) model, which we shared yesterday, is accurate.

Their conclusion … “inflation peaked in June.”

Musk & Twitter

Shares of Twitter (TWTR^) rose nearly 8% after the company announced its intentions to sue Elon Musk.

The company claimed it needs “only four days” to beat musk in court.

Crypto Update

At writing, Bitcoin^ is trading below $20,000.

Crypto lender Celsius filed for chapter 11 bankruptcy protection. The firm is the latest in a long string of failures in the crypto space.

Our stance on crypto remains unchanged … The weak need to go. 

This shake-out is ultimately a bullish indicator.

Technicals:

Yesterday, the yield curve inversion between the 2 and 10-year bonds reached its biggest spread since 2000.

2 year 10 year bond spread chart

This “recession indicator” has grown too big to ignore.

At this point, a “mild recession” is very likely, as analysts from Bank of America (BAC) concluded.

Other indicators I’m watching:

  • The VIX remains elevated but in check
  • The put-to-call ratio is oversold … *AGAIN*
  • RSI levels are nuetral

Timing:

It’s earnings season—Big banks start reporting premarket today. Our main watch…

  • JPMorgan Chase (JPM)
  • Morgan Stanley (MS

The next major date on our calendar is July 28th…

  • Q2 GDP numbers drop premarket
  • The Fed will announce its latest rate hike in the afternoon

Watchlist:

*Low Float
^Open Position

*HTGM has support at $1.50
*TRVI has support at $3.50, resistance at $4
*FNKO has support at $22
^CBIO has resistance at $1.80, support at $1.60
TH is on watch
WVE has support at $4
SIGA has resistance at $15
CELH has support at $75
ALDX has support at $5
NCNA has resistance at $1.5
VERU has resistance at $16
^CTIC has support at $6.50
SGEN has resistance at $180
TCRT has resistance at $1.50

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