CPI landed at 4.2% this morning, which is still more than double what the Fed keeps telling you it’s targeting, and the bond market saw the whole thing coming months ago.
What I’m watching now is correlation. The selling so far has been pockets, mostly stuck in tech, and the market does not fully unwind until that selling goes broad and starts dragging down the names that have been holding up.
So this morning I went on the Schwab Network and walked through three defined-risk spreads I’m working right now, every one of them aimed at a stock the crowd still thinks is safe.
Here’s what’s inside the segment:
→ Why I’m short a homebuilder that ran from the low $120s into the mid $140s, in a sector I cannot find a single good reason to be buying right now.
→ The bearish position I put on against an airline sitting near its all-time high, even as rising fuel prices quietly eat its margins, a chart and a story that flat out do not agree with each other.
→ The financial name up 15% on the year that everybody loves, and why I think the one last good catalyst it has left is already priced in before the fall.
→ Why the rotation out of tech and into the beaten-down names is telling you something specific about where we are in the cycle, and what most traders are getting wrong about it.
→ PLUS the phrase I used on air to describe a problem building under this market that nobody on the desk had a comeback for.
To your success, Don Kaufman
P.S. The SpaceX IPO hits Friday, the biggest one ever, and it lands the same day the inflation data does. That is exactly the kind of two-sided tape I want to be watching live, not reading about after. So this Friday only, I’m going live all day with Brandon Chapman, Blake Young, Tony Rago, and the rest of the TheoTrade crew for a free event we’re calling SpaceX IPO Friday Funday. We start at 9:15 AM ET and run through the close, breaking down the market in real time and trading the IPO as it develops, right alongside you. No cost. One time only. Save your spot here.
