Big event was release of the Producer Price Index (PPI) and Consumer Price Index (CPI) reports, which confirmed record-high inflation persisting – no surprise to those of us who pump our own gas, shop for our groceries and pay our utility bills, unlike our out-of-touch elected officials in Washington who delegate such tasks to staff.
Stocks initially sold off, then inexplicably rallied on the CPI report (highest cost numbers since 1982), then sank again the next day. The short-lived rally and our analytics indicating more potential buy signals than sell short signals suggests institutional investors are sitting on piles of cash and anxious to get back into stocks at the first sign of a market bottom, which they may have thought was occurring following the post-CPI decline.
This pent-up desire to put money back to work (“get back in”) will likely manifest with an intense upward rally at the first real sign of economic improvement. Not sure what or when that will be, but we are just about 3 weeks from the mid-term election, and that may be what has investors jumping the gun.
For all the intra-week volatility, most stocks – including ours – ended up about where they started, or lower (resulting in new multi-year lows for the Nasdaq Composite and S&P500 Indexes). As a result, very few highlights and even fewer trade signals.
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