Quick summary:
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SPX showed noticeable volatility last week, despite a relatively hawkish testimony from Powell in Congress on Wed and Thu.
For us, it was a great week, with a 3% return realized overall. It was going even higher at Friday open, but the reversal hit our stops on the way down, making sure we pocketed the 3% move. Now at 12% YTD (gross).
This week's spotlight is on CPI data today (hotter than expected), and PPI on Thursday. We also get retail sales on Thu, and manufacturing, industrial production and consumer sentiment all on Friday.
Last week we showed you how the paid section caught very important moves in markets over the past 6 months. This week we will dig deep into the inflation data and discuss implications for the upcoming FOMC next week. Don’t miss it.
The competition
Solid performance despite the market's ups and downs last week, with the DJI and VIX indices still showing tight movements compared to the SPX and QQQ. Despite economic speeches and reports shaking things up, there's still some excellent precision on these fluctuations!
Keep it up everybody! And remember, consistency is key to staying in the top. And good predictions, obviously.
NOTE: For all those new to the whole thing, read more about it here or watch a video of Scott and myself guiding you through the survey, showing you all its features, and briefly explaining how the competition works.
Podcast: To the Moon? Bull run & inflation
Last week’s performance
Reflecting on last week's market activity, the SPX exhibited some interesting volatility. After a Tuesday sell-off, we opened gap up on Wed and kept rallying during Powell’s congressional testimony. However, despite him being relatively hawkish (and confirming what I’ve been saying for a while - no more than 3 cuts this year) we then saw a reversal by the end of day. No such moves on Thursday - a gap up and a rally the entire day (like Fri of the previous week).
Then on Friday, we got the unemployment numbers still suggesting a very resilient labor market. The immediate reaction was a gap up open on the day, but then all of a sudden, it reversed. A more than 1% swing down during the day signaled the end to a volatile week.
But notice something else. The trend. Still up. Higher highs, lower lows. The corrections are still being bought, and the 4-month bull rally continues.
For us, it was one again a buy signal, and we made most of our return already on Thursday. As Friday pushed up, our revised stops made sure we pocketed the full profit from the day before once the reversal started. I was expecting another squeeze day, but it was not to be. Maybe next time.
Altogether a 3% return for the week, 12% year to date thus far.
This week, the market's focus will be primarily on the release of the CPI today and PPI on Thursday, so expect more volatility. The CPI's significance is amplified after the previous report showed prices to be stickier than expected raising questions about whether inflation will continue its downward trend.
And we got something similar today; higher than expected. Yes, the trend is down, but prices are sticky, no doubt about it.
Look at the monthly changes, it’s gradually increasing even as the annual inflation is staying around 3%, and core slightly below 4%:
Will PPI continue in the same direction, and what’s the implication for markets this week? You tell us!
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DISCLAIMER: Neither the survey nor any of the contents of this website can act as investment advice of any kind. The results of the survey need not correspond to actual market preferences or trends, so they should be interpreted with caution. Oraclum Capital, LLC (Henceforth ORCA) is a management company responsible for running the ORCA BASON Fund, LP, and for organizing a survey competition each week, where it invites the subscribers to its newsletter (this website) to participate in an ongoing prediction competition. The information presented on this website and through the survey competition should under no circumstances be used to solicit any investment advice, nor is it allowed to be of commercial use to any of its readers. The survey and this website contain no information that a user may use as financial or investment advice. All rights reserved. Oraclum Capital LLC.
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