Financial News vs. Noise
On Friday we had a hotter than expected PPI, on the heels of a hotter CPI on Tuesday. This leads to the obvious concern that inflation will come back.
Coming into this week the question is whether we brush off PPI like we did CPI. My sense is that we do as the market is no longer expecting a cut at the next Fed meeting, but be ready for anything. The narrative I am hearing at the moment is that one print doesn’t change the narrative, but markets are red this morning. The key data this week is NVDA earnings on Wednesday after the bell. The stock is set up for perfection:
Doesn’t mean it will go down, AI is up there with the dot com’s in terms of catalysts. My trend and counter trend models are both currently long, but may or may not still be ahead of earnings. If they are, I will probably at least trim. It is down this morning along with the markets.
Meanwhile, continue to watch rates. They moved up again Friday with the 10yr now at 4.295%.
The spread between the S&P 500 earnings yield and the 10 yr is now 14bps, the tightest in more than 2 decades. For now equities are shaking this off, but for how long is the question. Coming into the year I believed, and continue to believe, that what the Fed does vs. what the market thinks they are going to do is going to be the main driver this year, everything else is just eye candy. So far I have been wrong as the expectations have come down and the market has gone up. Entering the year the market was thinking 7 rate cuts, now you have Citi talking about a potential hike. Still think you need to watch what the bond guys are thinking as I believe it will eventually filter down into stocks.
SMCI is a name I have been talking about. We added it to your watchlist with a trend following model, but didn’t want to chase it. The thing about parabolic moves is they eventually retrace and Murphy’s Law says they do it as soon as you FOMO in.
I may get into this if it holds support at the 10 day, not sure I would do anything until NVDA reports. Another reason you have to resist FOMO:
Precious metals are back on my radar front and center this week. I went back into GDX and already have GFI and SLV. On GDX we have an undercut and rally at the November low, but I would like to see it move above the 10 day.
Still own all the crypto names, but did roll up on my COIN and take some profits as this is starting to look like SMCI.
Again, I believe that the spot ETF is a game changer and you want to trade the crypto space, just wouldn’t chase.
ALB is a name I bought last week so not happy about this even though I love the chart here. Are Lithium Stocks at Rock Bottom? The volatile metal has spawned a volatile market, and prices have fallen too far to cover the cost of supply needed for electric vehicles-WSJ
Gold and the miners are interesting this morning as they seem to be showing a lot of relative strength in a weak pre market. I am long GDX and GFI currently. Also long SLV, which is relatively weak. Not sure what’s going on, and it’s too early to read anything into this, but would have expected the entire precious metals space to be weaker after PPI.
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Matthew Tuttle is the Chief Executive Officer and Chief Investment Officer of Tuttle Capital Management, LLC.
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