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November 11th, 2022
Four Bullish Market Indicators Heading Into Years End
The market flipped in a day and skyrocketed as soon as the much-anticipated Consumer Price Index report was released in pre-market. The report showed that prices rose 7.7% year-over-year, but that was the smallest increase since January. Is inflation really in the rearview mirror?
Fed pricing for the December meeting is now heavily tilted towards a 50 basis point increase rather than a 75-point increase as the CPI is lowering and the job market is softening. Those close to the situation see a 50-point increase in December as a > 70% chance of happening.
The 10-2 yield spread is leveling out and coming off a low. If we see this climb above -0.45 (it’s currently at -0.52), we could see the Santa rally start to kick in.
Ok, this is the sad one, but comes in under the bad news is really good news category. Jobless claims came in at the high end of the consensus range for the week, coming in at 225k. This comes on the heels of companies like Meta Holdings (META) announcing layoffs and Amazon (AMZN) launching a cost-cutting review. A softer job market should help ease inflationary pressures.
Now, before we get too excited. The market has a very recent history of giving us strong days, only to take them away soon after. Will this be another one of those times?
The market does seem to have a violent reaction when the SPY is hovering around its 50-day moving average. It closed above it for two days and the moment it fell below, the market propped it back up the next day. Institutions are coming out to play.
Hey, before we get to the trade of the day, I want to invite you to the Synergy Traders 2022 Friendsgiving Conference! I will be speaking on Monday, November 14th, and will be part of 40 other traders giving presentations over four days.
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If you want to join me at the Friendsgiving conference, Reserve your spot here!
There are two stocks I’m looking to trade next. I’m looking at Horizon Therapeutics (HZNP) and Agilent Technologies (A).
HZNP found support along its 50-day moving average and bounced higher after its recent earnings report. It’s hitting a line of resistance that has been around for a while. Some could argue that it filled its gap and will now be headed lower. It’s on my watchlist for now. It tends to perform well in the November to December timeframe, so I’m watching to see how it will respond at this level.
Next is Agilent. It finally broke above $140 after being stopped there on three separate occasions. Maybe even four if you count the big red bar. If this line starts acting as support, we could see Agilent retest the highs of $149and maybe go higher. I certainly like that it’s been in an uptrend since mid-June.
Have a great weekend everyone! Again, if you want to come out and support me at Friendsgiving, 2022, make sure you Reserve your spot here!
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Editor, Filthy Rich Dirt Poor
Trader, Options Testing Lab
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