11/11 Recap

CPI came in hotter than expected with core up way more than expected and equities did not like that. We’ve been told for months now that inflation was over and that a soft landing was achieved, today’s data did not agree with that sentiment. I’m still in the camp that at some point we will have to raise our inflation target to 3% because 2% is not achievable, but the ramifications of that are too big, so we continue down this path for now.

Today was a nasty day in the megacap space, only 2 were green right now, Amazon on news from Yipit premarket that AWS surprisingly re-accelerated this past week and by quite a large margin and NVDA because NVDA never goes down. Tesla was the worst and broke its 200 day average today, and while I know most think that’s the time to buy a name, that’s actually the worst time to buy. You want to wait for the 8 and 21 ema to settle down and for the name to reclaim those first. Below is the Tesla chart, see that massive bearish engulfing candle at the end of 2023, that was your reversal signal. It’s down $40 in a straight line since. Today you see it below the 200 day, the green line, you notice how the 8 ema(dark blue) and the 21 ema(light blue) are sloping down? On every move up, Tesla will be sold until those flatten out and are reclaimed. That is why down moves take time to settle, this is why I always tell you fundamentals don’t matter as much as people think, the computers doing all the buying and selling don’t care about fundamentals, they only care about where a name is trading and for now Tesla is weak. Not that it had good fundamentals to begin with for that crowd.

The SPY itself is putting in a bearish engulfing candle, still a lot of time left in the sessions and hopefully it closes higher if you’re long, so far a perfect test below the 8 ema and recovery but no you don’t want a bearish engulfing on the daily here. You can see the bearish divergence below in the RSI as it ticks lower while SPY ticks higher. As long as the SPY remains above that 21 ema, the market is ok.

Yields remain strong with the TNX flagging here right over 40. Rate cut odds remain high, but today’s data was not very good, so who knows what happens in March but the fed would look silly cutting rates into CPI like that. Yields are stuck below a key spot and equity bulls want to see that but this is a potentially nice formation here for yields to go much higher if they can close over that green line.

Trends

Amazon and Nvidia are the top trends over the last month so not shocking they’re the 2 strongest megacap names today, they’ve been buying those nonstop, NVDA especially look at it leading so far this year. CYTK plunged on some report that Novartis wasn’t interested anymore, I don’t buy that, in fact I noted some Novartis puts in today’s table, that was someone buying them on the notion they buy CYTK and dip. I’d actually buy this dip in some commons in the low 70s and wait a month or two. They always play games with these buyouts. American Express surprises me as the leader in bearish trends this year they report in 2 weeks.

YTD

1 Month

Today’s Link To The Options Database

As I said yesterday, everyday there will be a new link here, below, for the people on the substack, those of you in the LIVE part, I will post a different link there that won’t expire at the market open. I hope you found the database useful yesterday, I will leave up access over the weekends on Friday recaps for those who want to get work done with earnings season coming up. How was functionality yesterday, was it operating quickly and with no issues? I didn’t really get any feedback on that.