Trading charts for Wednesday, Feb 15th
Good morning and Happy Wednesday,
Yesterday was a little bit of a rollercoaster before and after the CPI report at 8:30am. Futures were up slightly before the report, then down, then up, then down then flat. Here’s how the indexes finished yesterday:
Overall the CPI was a little hotter than expected but it’s because BLS changed the composite for 2023. Here’s how the individuals inputs looked:
With the hot jobs report a couple weeks ago and now this warmer than expected CPI report, I think it’s looking more likely that the FOMC hikes two more times (25 bps each) but maybe the market is willing to look past them because inflation is still coming down and the economy is not falling apart. Soft landing still looks like the most probable outcome with a minor recession at worst and no recession at best.
I went into the CPI report with 0 positions in my trading portfolio but after the markets opened and we saw some bounces and breakouts I decided to add some exposure and ended the day with 11 positions at approx 5% each. I’ll look to add more exposure today if the setups play out the way I expect but stop losses need to be tight.
Lots of traders (thankfully not me) are getting smoked today on CRDO with the stock down 48% pre-market after they pre-announced last night and said Q4 revenues will be 50% below estimates. This is a good reminder that smaller companies can punish investors more harshly versus trading larger caps like UBER ABNB ALGN etc however the bigger gains typically come from the smaller names so you have to make some tradeoffs.
Perhaps we need to consider holding more cash into earnings season and then only trading the stocks that have already reported because the earnings misses and pre-announcements can really crush you if you’re on the wrong side of them.
Below the paywall is my current portfolio (11 stocks) with entry prices & stop losses, current watchlist (25 stocks), charts for all 25 watchlist stocks with target entry prices, links to my live Zoom sessions today