CPI Numbers

[chippermon]

The numbers seemed to have come out rather neutral. Markets are up. For how long today we shall see.

Keep in mind besides "revising" how the CPI numbers are determined, they also "revise" the numbers from previous months - I think the CPI numbers for both December and November were revised up recently.

Day-trading off CPI numbers over the long-term is a losing proposition, I would wager.

It's not the numbers you are day trading off of, it's the volatility created by them. You can set your support and resistance levels before the event. The 4H or 60M charts can give you a general bias and you can trade off of your 5M and 15M charts. For instance. Just saying. For this type of trading the actual numbers are less important. Traders tend to step out of the way to see what happens pre event. This creates a lack of bids and offers, ergo volatility.

Certain pockets of liquidity are found that stop the bleed. Possible reversal points. I wouldn't trade actual ES just 0DTE ES options. Warning. This takes time and attention. Selling these options is for the hedgers. Leave it alone. My opinion. Unless yo want to do butterflies and such. Try to buy option strikes that fall within your targets (In the money). It's not uncommon to see options drop to 1.50 and end the day at plus 25.00.

This should pacify your need for speed jonnyfrank.

[Triplethought]

Article in today's WSJ from 2 smart guys claims they predicted inflation 2 years ago (I checked their link and they are telling the truth- they really did.) They are also predicting "recession may be on the way" since the FED isn't slowing down interest rate increases. The article tile is "High inflation will end soon". They are predicting inflation " 2% and 5% at the end of 2023." That's a broad range and hardly portends a recession but I generally believe them since Alan Blinder has argued we're already close to 2% for last 6 months.

Alan Blinder's article last month... predicted the same thing. Alan pointed to inflation monthly charts for the last 6 months and pointed out the stark slow down since NOV. The problem is everyone else is quoting yearly numbers, which average inflation growth for the first 6 months of 22. As SOL says look at both yearly and monthly charts. Or maybe SOL says weekly...he says so many things I'd have to look at the monthly with the new CPI number that just came out.

https://www.wsj.com/articles/high-infla ... major_pos4

Alan Blinder:
https://www.wsj.com/articles/the-fed-no ... 1675866915

Take a look at the speed of the fed rate increase. If they do achieve recession Stocks usually do poorly in the first part of a recession, which means we probably shouldn't be buying heavily right now (consistent with SOL's recommendations I think).
https://www.visualcapitalist.com/compar ... ate-hikes/

[SOL]

Article in today's WSJ from 2 smart guys claims they predicted inflation 2 years ago (I checked their link and they are telling the truth- they really did.) They are also predicting "recession may be on the way" since the FED isn't slowing down interest rate increases. The article tile is "High inflation will end soon". They are predicting inflation " 2% and 5% at the end of 2023." That's a broad range and hardly portends a recession but I generally believe them since Alan Blinder has argued we're already close to 2% for last 6 months.

Alan Blinder's article last month... predicted the same thing. Alan pointed to inflation monthly charts for the last 6 months and pointed out the stark slow down since NOV. The problem is everyone else is quoting yearly numbers, which average inflation growth for the first 6 months of 22. As SOL says look at both yearly and monthly charts. Or maybe SOL says weekly...he says so many things I'd have to look at the monthly with the new CPI number that just came out.

https://www.wsj.com/articles/high-infla ... major_pos4

Alan Blinder:
https://www.wsj.com/articles/the-fed-no ... 1675866915

Take a look at the speed of the fed rate increase. If they do achieve recession Stocks usually do poorly in the first part of a recession, which means we probably shouldn't be buying heavily right now (consistent with SOL's recommendations I think).
https://www.visualcapitalist.com/compar ... ate-hikes/

I think you are confusing Monthly and Weekly with Yearly. I don't speak of yearly in isolation because monthly charts and weekly charts are based on several years of data with monthly charts dealing with even longer time lines. The difference is that in the Monthly charts, each bar represents one month's worth of data and on the weekly charts each bar represents one weeks worth of data.

[Yodean]

*****

It's all a scam, fake news ...

CPI is being revised in how it's calculated - to emphasize rent/housing and used cars more, for example. The latter two have been going down price-wise recently, but there is a significant lag in time before they show up in the official CPI data.

What does this mean? Well, it might mean that as the year progresses, CPI will flatten and roll over for a bit, especially when the new, revised higher numbers for the last three months of '22 are taken into account - i.e. base effects, as new CPI numbers are compared with last year's.

The Fed and the current administration will be able to claim that they are winning the battle against inflation.

Meanwhile, them eggs still expensive.

[Yodean]

Article in today's WSJ from 2 smart guys claims they predicted inflation 2 years ago (I checked their link and they are telling the truth- they really did.) T

WSJ is generally a Fade. Meaning that it usually turns out to be wrong from the perspective of being profitable trading the markets.

The JBS is still in effect.

The recession narrative is overblown - it's bogus since there are no objective parameters for defining a "recession."

The NBER reserves the right to "declare" a recession officially - often months to years after the fact. It's completely subjective, while made out to sound objective (i.e. negative GDP with high unemployment). Very opaque.

Q1/Q2 in 2022 was a recessionary period, for all intents and purposes.

We're coming out of a recession, for the time being.

[MarkD]

*****


Meanwhile, them eggs still expensive.

Covid was the best thing for my diet ever. And I discovered just how good them overpriced Amish organic eggs truly are!

[Triplethought]

Article in today's WSJ from 2 smart guys claims they predicted inflation 2 years ago (I checked their link and they are telling the truth- they really did.) T

WSJ is generally a Fade. Meaning that it usually turns out to be wrong from the perspective of being profitable trading the markets.

The JBS is still in effect.

The recession narrative is overblown - it's bogus since there are no objective parameters for defining a "recession."

The NBER reserves the right to "declare" a recession officially - often months to years after the fact. It's completely subjective, while made out to sound objective (i.e. negative GDP with high unemployment). Very opaque.

Q1/Q2 in 2022 was a recessionary period, for all intents and purposes.

We're coming out of a recession, for the time being.

Well since I'm 1/3 of the JBS and (I'm still sitting w 75% in cash) feel free to keep buying. But even a broken clock will eventually be right.

I agree with both your points about CPI being a moving target manipulated by the feds and that recession is no longer defined as 2 quarters of negative GDP. But as your chart attempts to demonstrate what is more important for our purposes is whether we can expect stocks to continue to go up or not, even in the face of FED tightening. I find the graph hard to believe but will study the issue a bit more. Even if the broad indexes are down we hope that WE (the smartest guys in the room) can make buys that DO go up (even in the face of headwinds). But in my view SOL's picks in 2020 and 21 largely followed the pattern of the NASDAQ, which has been down during all of 2021 and first 3 quarters of 2022. That entire 7 quarters SOL was saying the "trend is up" our picks clearly were not... not for most of the basket of stocks we had. Arguably your "Jesus Buy Signal" Oct 1 of 2022 (based aprtly on my pussification) has been broadly correct as Nasdaq has risen 10.5% since OCt1 and the S&P 13%. It is not a trend that Trend Trader has capitalized on much as we've had relatively few buys in this period (and me even fewer since I suspended most buying activity in September). My pussification was based on SOL's concern beginning in fall of 2022 after we had sustained 7 quarters of mostly losses.

I remain pussified for now and 2 things will change my mind: 1) The FED reversing course 2) SOL issuing more buy orders on (hopefully) more value stocks. I don't mind losing a bit of upside to have the money secure for another year. At some point the MOBO or FOBO will occur and hopefully make up the lost opportunities.

[SOL]

That entire 7 quarters SOL was saying the "trend is up" our picks clearly were not... n

7 quarters is s a totally wrong assessment. Up to late Feb 2022, things were still on track and we would have had the tail-end move had it not been for the stupid sanctions on Russia which was akin to shooting ourselves in the foot. If you look at the Main trend portfolio which is what everyone is told to focus on. A large majority of the stocks have recouped.

As for trends as I stated before, the trend indicator is not based on one year it's based on multi-year data. Hence no man alive or dead can pull up a long-term chart and prove that it would not make sense to be invested. Even the worst disaster looks like a blimp on a long-term chart. As the money supply has increased the wait time from bust to boom has accelerated.

We did a rough calculation earlier this year showing I think that the main portfolio had 21 winners. Despite all that carnage, we closed out more winning plays in the main portfolio than losers. You can check them for yourselves. We will do a more in-depth analysis in one of the updates.

[SOL]

That entire 7 quarters SOL was saying the "trend is up" our picks clearly were not... n

7 quarters is s a totally wrong assessment. Up to late Feb 2022, things were still on track and we would have had the tail-end move had it not been for the stupid sanctions on Russia which was akin to shooting ourselves in the foot. If you look at the Main trend portfolio which is what everyone is told to focus on. A large majority of the stocks have recouped.

As for trends as I stated before, the trend indicator is not based on one year it's based on multi-year data. Hence no man alive or dead can pull up a long-term chart and prove that it would not make sense to be invested. Even the worst disaster looks like a blimp on a long-term chart. As the money supply has increased the wait time from bust to boom has accelerated tremendously

We did a rough calculation earlier this year showing I think that the main portfolio had 21 winners. Despite all that carnage, we closed out more winning plays in the main portfolio than losers. You can check them for yourselves. We will do a more in-depth analysis in one of the updates.

[Yodean]

Arguably your "Jesus Buy Signal" Oct 1 of 2022 (based aprtly on my pussification) has been broadly correct as Nasdaq has risen 10.5% since OCt1 and the S&P 13%.

The JBS was triggered closer to the October 13th date, when CPLie came in hotter than expected, yet markets closed up after initially opening down - classic bullish news divergent price action.

It is foolhardy to stand against Jesus of Nazareth. He was trained by Aliens and given special powers. He told me to buy stocks in October, which I did, and I have continued to buy, including on margin.

Non-believers will have their PNLs perished, like little vaxxed gnats.

Many believe, but few understand.

[SOL]

Initial signs of FOMO, retail investors have been pumping 1.5 billion per day as of late into the markets. But overall the markets have mounted a good rally, proving that when you short you have to short when it looks like its a bad idea

[jonnyfrank]

For what it is worth, I have been pretty dormant just plying with my ST portfolio by moving in and out of FNGU. I bought into some again today around noon. I will sell probably Tuesday or W hopefully at a small profit. This is how I have been making money on the swings lately. Nothing scientific just more based on news and retail investor emotions. I am still waiting for the big buy signal.

[Triplethought]

As for trends as I stated before, the trend indicator is not based on one year it's based on multi-year data. Hence no man alive or dead can pull up a long-term chart and prove that it would not make sense to be invested. Even the worst disaster looks like a blimp on a long-term chart. As the money supply has increased the wait time from bust to boom has accelerated tremendously

The observation about wait time from bust to boom based on money supply is an interesting perspective. Can you demonstrate that correlation of money supply on a chart or using empirical analysis of the top bottom values? What constitutes a boom or bust (percentage swing from bottom?) If that is true, to me it just means continue to be patient and wait for a drop.

But SOL I found the comment on trend indicator based on multi-year unfair. It is true that over a 30 year span the stock market returns close to 10%. That means if you invested in say S&P index fund those would be your typical returns. But that IS NOT what you are doing. You are saying that as active investors, and with your help, we can or should BEAT that 10% return over the long haul. And in 2020 we DID, by a wide margin (including high risk and AI plays). I look forward to your detailed analysis but the amount of dollars in my account gives me a pretty good idea. Cherry picking the low risk stocks of the main portfolio to analyze returns is a bit disingenuous. I mean if you want to report those great, but I feel that we need to do it also for the riskier plays and also for the AI portfolio as well. After all, if all the high risk plays were booming you'd certainly include them when reporting the good news.

Obviously some smart people have claimed that active investors generally can't beat the indexes (The Vogel crowd). I've been willing to bet they are wrong, which is why I subscribe. But if the "trend indicator" is a multi-year indicator the questions are 1)) under what conditions would it go negative? 2) How far forward is it looking? I DO realize no one has an infallible crystal ball - I'd accept a slightly cloudy one. You would need to argue the indicator is looking at a trend that is longer than 1.75 years. Because for the 7 quarters or 1.75 years of 21 thru sept 22 your indicator was up (meaning buy buy buy) while all 3 indices ratcheted down that entire time. The ultimate "no shit Sherlock" position to take is that over many years the stock market is generally up. But I would want the "trend indicator" arrow not to be completely F-ing useless. One would hope it would semi-predict where the market is heading in the next year (preferably over the next few months).

[outof thebox]

@TTH lots of higher risk plays in the Main Trend Portfolio. I don't have the patience to do it, maybe Sol or Nicolas or another patient TI subscriber can but a quick cursory glance indicates that when all the open and closed winning and losing positions for the last 12 months are tallied up, that over 60% are winners.

I suspect that I and many others decided to use the Sol's guidance to venture off on our own instead of sticking to the TI plays. If I had stuck to main portfolio plays (which include options and several high risk red plays) I would have probably closed 2022 in the black.

[Yodean]

The observation about wait time from bust to boom based on money supply is an interesting perspective. Can you demonstrate that correlation of money supply on a chart or using empirical analysis of the top bottom values? What constitutes a boom or bust (percentage swing from bottom?) If that is true, to me it just means continue to be patient and wait for a drop.

Obviously some smart people have claimed that active investors generally can't beat the indexes (The Vogel crowd).

*****

To your point regarding active investing vs. index investing, my sense is that at least 8/9 investors lose money in the markets over time.

So the basic idea is to first try to be in the 1/9 or so group who at least breaks even. After that, you can try to beat the indices.

The problem with pure index investing for most individuals is that while it's generally a winning strategy over the long-term, the year-to-year (or month-to-month, or day-to-day) fluctuations and volatility cause most to either sell near the bottom (from FOGU, fear of going under), or buy near the top (FOMO). Very hard to avoid this completely.

In addition, the actual drawdowns year-to-year can mess a lot of people up. Let's say you're a recent retiree who has everything in an equity index etf - unfortunately you adopted this strategy at the beginning of a year like 2008, or even last year.

After one year with this strategy, a huge chunk of your hard-earned savings just went up in smoke. Now you have to go back and get a job. And so forth.

That's where risk management, asset allocation, etc. comes in. Risk management always comes with a certain cost - i.e. you may not make as much on the upside.

Or, you can't have your pie and eat it too.