Geo-political risk was at the forefront of yesterday's news as Russia began its pullback of troops along the Ukranian border. Putin's big short on the U.S. stock market paid off, and he collected his gains in his portfolio and decided to cash out while he could. Markets bounced hard off the news, sending stocks like TSLA and NVDA into bullish support zones and trading windows. The overwhelming risk take off and news really overshadowed one key issue. INFLATION DATA. Markets completed ignored flaming hot data, has inflation rose to a 9.7% high. If you followed my trade alerts, you got this alert, and this could lead to some sell off here today as traders digest this data.
Why is this CPI data important? Well for one, this 9.7% is not very accurate and doesn't tell the true inflation data. It is manipulated and understated for political reasons. If you look at transportation, energy prices, home sales and household item inflation, you are looking at more than 20% plus on some of these product and services. If you have ventured out of your home and gone to your favorite restaurant, you will notice that all their menu items have had at least 50% or more price increases as restaurants try to stay afloat. If you get plumbing, pool, or other services you will also know price increases as well. So you may see this 9.7% posted, but your daily reality is showing much more inflation pain that affect your disposable income.
Secondly, this also is having a great impact on your savings and investments. Even if you do make any gains in the market, the rise of inflation pretty much wipes it out, leaving you with a zero net gain and hurting more. A traditional savings account with a low yield, means you are losing 9.7% plus a year just holding your money . This isn't great. This means the Fed rate hikes are going to come in hotter and faster than expected if anything is truly going to be done to curb this.
However, you have to consider politics in all of this. With another election just around the corner for key seats in Congress, Democrats don't want the Fed to raise rates quickly or more. This will lead to another huge market correction and make Biden look even worse ( I know you didn't think that was even possible).
BTC is finally showing a sustained level above 42k, which was a key resistance and new support threshold that it needed to cross. However, with crypto being so aligned with the market, any sell off there could lead BTC to drop heavily once again.
TSLA and NVDA continue to gain key moment, breaking resistance points and pushing into new bullish trading zones. I have posted in my live trading (subscription needed) and discord about these trends and my currents trade levels. We are collecting nicely, and NVDA posts key earnings today.
Thursday, February 17: Walmart (WMT)
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