Man...what a crazy week last week. With the Elections, CPI and the drama with FTX, it was a rollercoaster for sure. The FTX story was something else. But you know, during recessions, entities get exposed. Same thing happened with Enron in the 2000 bubble, the banks in 2008-2009 and now crypto. As the famous Warren Buffett quote says: "A rising tide floats all boats....only when the tide goes out, you discover whos been swimming naked.".
So let's recap a little what happened last week. I've been bearish the last few weeks and I had to be since we are in a bear market. With the Elections, FTX and the CPI report, the market was going to make a decision on the direction and the CPI report was what did it. With the gap up and 7% day on Thursday, it broke out of resistance and the downward trend line. The Dollar got crushed and bonds declined by 7%. That's mostly what fueled the rally. The market has been longing a reason to party because inflation peaked. Did they party to hard Thursday and Friday? Thursday, markets chugged 3 beers.Friday, took a shot of whiskey and said "I'm ready for more next week".
So look, I know inflation is still at 7% and we still need a ways to get down to the Fed's 2% target. It's a tough pill to swallow if you were bearish. But, you gotta trade the markets in front of you. Especially if the charts are telling you to go bullish. Generally the week before Thanksgiving is a good week for the markets, just not sure how much higher we can go this week because the markets used up A LOT of energy Thursday and Friday. It needs to take a break. If the market wants to party the rest of this month, I don't see why it could crawl it's way to 4100 before the next CPI report. One thing to note is tomorrow's PPI report. If this report comes in hotter, everyone who bought last week might step back a little. So if that happens, this would pull back the markets. If it doesn't come in hot, then we might head higher at a slow pace the rest of the month.
Plan for today: Going to sit on my hands today and wait for tomorrow. If PPI comes in hot and we get a big downward reaction in the markets, I'll watch the price action to see if this is a Bull pull back or not. Come Wednesday or Thursday, I'll see if there's a good entry for a bullish position. Be patient, stay disciplined, control your emotions and trade the market in front of you. Happy trading!
So let's recap a little what happened last week. I've been bearish the last few weeks and I had to be since we are in a bear market. With the Elections, FTX and the CPI report, the market was going to make a decision on the direction and the CPI report was what did it. With the gap up and 7% day on Thursday, it broke out of resistance and the downward trend line. The Dollar got crushed and bonds declined by 7%. That's mostly what fueled the rally. The market has been longing a reason to party because inflation peaked. Did they party to hard Thursday and Friday? Thursday, markets chugged 3 beers.Friday, took a shot of whiskey and said "I'm ready for more next week".
So look, I know inflation is still at 7% and we still need a ways to get down to the Fed's 2% target. It's a tough pill to swallow if you were bearish. But, you gotta trade the markets in front of you. Especially if the charts are telling you to go bullish. Generally the week before Thanksgiving is a good week for the markets, just not sure how much higher we can go this week because the markets used up A LOT of energy Thursday and Friday. It needs to take a break. If the market wants to party the rest of this month, I don't see why it could crawl it's way to 4100 before the next CPI report. One thing to note is tomorrow's PPI report. If this report comes in hotter, everyone who bought last week might step back a little. So if that happens, this would pull back the markets. If it doesn't come in hot, then we might head higher at a slow pace the rest of the month.
Plan for today: Going to sit on my hands today and wait for tomorrow. If PPI comes in hot and we get a big downward reaction in the markets, I'll watch the price action to see if this is a Bull pull back or not. Come Wednesday or Thursday, I'll see if there's a good entry for a bullish position. Be patient, stay disciplined, control your emotions and trade the market in front of you. Happy trading!