To The Moon

32.5% gain riding the news of CPI reading at open. Took puts during the reversal on NVDA and TSLA with 46.2% profit all the way down.

⚠️ Trading tips: Looking to trade the channel again between 450 and 444 on Friday. Be flexible to trade both directions as market is “under controlled” 😅

Trade the channel until it's broken

July’s consumer price index indicated prices rising by 3.2% on an annual basis, which was lower than the 3.3% forecasted by economists, per Dow Jones. However, the core CPI, which excludes volatile food and energy costs, rose 4.7% from the prior year.

“I think investors in general have just been overly optimistic as we enter this seasonally weak period,” said James Demmert, chief investment officer of Main Street Research. “The print on the CPI, I think, is a reminder: The Fed’s done a lot of this work that needs to be done, but it’s still a bit sticky. So that means rates [are] higher for longer,” he said.

Demmert added that there are indications the market may be due for more of a pullback from current levels, noting the market’s retreat from its “big open.” 

“That’s kind of what corrections look like as you roll through. And I think we’re just a third through this one, so far,” he said.

Buy Call #1

Buy Call #2

It'll be important to analyze the breakdown of individual components of the CPI. Oil and gas prices have soared this summer - which will impact energy - while food, rent and shelter costs, and healthcare, are also on watch.

Remember, the Fed also has another CPI report, the PCE report, and one more jobs report before its Sept. 19-20 meeting.

Buy Put #1

Buy Put #2

Buy Put #3

Buy Put #4

On a weekly basis, the S&P 500 and the Nasdaq are bound for declines of 0.2% and 1.2%, respectively. Both are on pace for their second straight losing week — a first for the tech-heavy Nasdaq since the conclusion of a four-week losing streak in December 2022. The Dow is an outlier of the three major averages, on track for a modest gain of 0.3%.

Investors will be keeping an eye on more economic data to come on Friday. July’s producer price index data will be out at 8:30 am, while preliminary consumer sentiment data for August is due at 10 am.

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