Market When Open - Thursday 16 May

Market When Open - Thursday 16 May
Photo by Joshua Woroniecki / Unsplash

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Yep, It Was Volatile

by Alex King

Monday I said, Wednesday will be volatile. For reasons unknown to me, oftentimes people see the word “volatile” and hear “down”. The Vix doesn’t help with this, of course, because this measure of volatility is usually inversely correlated with equity prices. But, volatile just means volatile, and what we got yesterday was a CPI number coming in around consensus which in a strange way was a surprise to the upside in equities. The Nasdaq was up around 1.5% on the day, the S&P around 1%, which is a strong move up but not a crazy ripsnorting move up (for that you would be looking for 2-3% in each index on the day).

Prognostication is usually pointless of course but if I had to guess I would say the market will remain in bull mode for 2024 overall. I don’t really subscribe to the “The BLS Manipulated The Data!” crew but it certainly seems like the powers that be are looking for the good news in prices, which isn’t the same as how prices are experienced by regular people in everyday life. Our job here is not to opine on the righteousness or otherwise of that; our job here is to try to watch risk asset prices and to help our members make good decisions as to how to act on those prices. In other words - we only care about risk asset prices, we don’t care about IRL.

Personally I was fully hedged on index ETFs heading into CPI; the longs were green and the shorts were red. Coupled with unhedged single-stock longs I had a modestly green day. I ate some short losses this morning; I am now 2:1 long:short in index ETFs in my trading account, and unhedged long in long-term accounts. The market doesn’t look all that positive to me today, so I may add back some of those shorts, we shall see. Inner Circle subscribers will see trade disclosure alerts ahead of any such trades, as always.

With price only in mind, and without further ado, let's get to that daily market analysis. As always we cover all four primary US equity indices (the S&P500, Nasdaq-100, Dow Jones-30 and Russell 2000); bonds (TLT), volatility (the Vix), oil (USO) and sector-specific ETFs. We provide long- and short-term insight daily and we include coverage of leveraged ETFs which - if you have gotten sharp at the rotation and hedging methods we teach - can be used to very good effect. All of this features daily in the pay version of this newsletter.

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