All Eyes on Inflation (November 13th-November 17th)
November 13-November 17, 2023 by Adit Dayal for RIPPYGLOBAL.
Happy Sunday everyone and welcome back to the Rippy Global weekly outlook. After the CPI report in October, the market went on a roar up almost 5.5% and it’s time for the next one. The market closed this week +1%. With many upcoming catalysts this should be an interesting week for traders!
Let’s take a look at what this week has in store!
Artificial intelligence has been one of the main drivers of the market this year, but there is one “Magnificent 7” stock not participating in the rally yet - so far. Where has Apple been? Tim Cook said they’re investing into it but we haven’t seen any of that progress. This weekend Morgan Stanley analysts gave us an indicating that 2024 could be the year that will change citing the advancement of “Edge AI”. That refers to the AI that’s being used on smartphones and smaller computers, and Apple’s new chip - the A17 Pro. Second, the large use of the App Store lets the company profit off of other people’s AI products. The combination of AI and Siri can also be a positive catalyst for the company. On the other hand, sales have slowed for the company and the company is showing signs of that to the public by increasing the value of trade in’s displaying their need for you to upgrade.
Everyone who knows my trading knows how much I love keeping up with highly shorted stocks, and we finally have something super interesting. In terms of notional value, Tesla has been the most shorted stock for as long as I can remember, but there’s been an upset to … Exxon Mobil?!! This is interesting with the interesting considering the recent decline in the price of oil. In the event that oil gets a catalysts that sends it, I think the trade can be in Exxon as all those shorts will look to cover. Chinese refiners asked for less oil which signaled to the market that demand is weakening in that area and oil slid again this week.
The big news on Friday (that the market really didn’t actually react to) was that Moody’s downgraded the US credit rating outlook to negative. Luckily long term debt is still stable and secure but citing the issues of a potential government shutdown and lack of fiscal policy, they don’t like the current outlook.
The main news this week will be October inflation data as Powell said last week that the next decision on rate hikes will be data driven. Economists are expecting the smallest increase in hikes since May, but the reason for this is mainly due to gasoline prices. A look at the Truflation estimates shows that they believe inflation is less than actual reported price. Still, purchasing power has corroded by ~23% by these same estates since just 2023 (!!!) and the Fed needs to get to their 2% goal quick, especially in a tense political climate.
#1) Earnings week is slowing down after what was an interesting week for mid cap names. Now what I’m looking for in these smaller caps in earnings revisions for the future that increase - showing that even in a week small cap market they have strong earnings. High beta names like WKHS XPEV SE and more report this week.
#2) On Monday, OPEC will publish their monthly oil report.
#3) On Tuesday at 8:30 AM, the CPI inflation report will release with the 4.1% YoY inflation number to be expected.
#4) On Wednesday, the PPI inflation report will be released and so will the retail sales report for October.
#5) On Thursday, an array of different Fed members will speak at different times through the day which may result in market volatility. They will be discussing macroeconomic stability.
The S&P 500 ($SPX index) jumped into a massive trend line breakout here! Bulls hope we don’t fail this level because fast fail = fast trade and means we slide pretty fast back to lows from my view as those long orders on the breakout get trapped, but as long as the trend line holds it sets us up for a powerful new move.
My key breaks are $4423 for bulls and $4354 for bears.
The best ways to play the S&P 500 are via. SPY/SPX options or SPXL (3X Bull S&P 500 ETF.
INDIVIDUAL STOCKS & LEVELS
Let’s recap some of the levels of some popular names:
Tesla has continued weakness after their earnings along with the whole EV/clean energy sector and has a gap to fill to $240/ usually I stay away from names with weakness like this and I think this time is no different until we get a positive catalyst for this name.
Apple is on a huge breakout as predicted last week and I’m hoping it flags here or comes back to retest this trend line because sellers do not want to sell here with every candle showing massive strength. Upcoming catalysts for 2024 as well as I mentioned in the analysis section at the beginning of the newsletter.
PENN is a gaming mid-cap stock that popped on earnings but ended up selling off, but is now showing signs that it’s ready for another massive breakout here. Nice consolidation at resistance should lead to a powerful move if market allows.
Insider buys are heating up with XOM getting the biggest one. This si interesting after it’s now also the most shorted stock in terms of notional value on the market so this play can start heating up soon! Bill Ackman’s Pershing Sq. Also keeps getting into HHH.
Thanks for reading this weekend’s article, have a great week!
-Adit Dayal (https://twitter.com/tradelikehulk)