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Stock Market: What We're Watching With $SPY

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Short term, there's plenty to lean on this stock market. As you know I've been short term bearish but the downside risk/reward shorter term is not as good after this recent move. There can easily be a bounce but a shorter term bounce.

Medium term though the break of 289-290 in the $SPY is a risky medium term break. If it doesn't crawl back above it, to me it's more confirmation of downside.

You have a few things weighing on markets and one main thing supporting markets.

Weighing on markets is President Trump's tough talk on China ahead of their Oct 10th meeting, Impeachment talk, and last week's PCE Price which ticked up to 1.8% closer to the Fed's 2% target. That can mean fewer rate cuts which the market is not yet pricing in.

Supporting markets, and this is so key to watch are yields. Yields hanging in there and not jumping makes you not want to be aggressive short when markets trade off into near-term support. But at some point I think yields can break …

Stock Market This Week: Inflation Matters More Than Trade

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Inflation matters more than trade. PCE Price reports Friday. The CPI has been elevated tracking 3% annualized over the last few readings. If that keeps up that can force the Fed to raise, not cut.

If Inflation shows another .3 core or more, yields could get testy. Low yields have been supporting this market for a decade. If that changes, the stock market has more risk.

The Fed may be worried about that next inflation number. The Fed guided to expect no further rate cuts. We told subscribers the day ahead of the Fed decision we thought the market could sell off on that but that dip could be bought. That's what happened. The next day though I didn't like the action and we recommended to get back to flattish net exposure but hold on to our top ideas.

The latest round of trade tweets and news saw China calling trade talks "fragile" and President Trump appeared to back off from plans for an interim deal. He wants a "complete" deal.

So some tailwinds have turned…

Stock Market Update: Fed Has A Problem This Week

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The Fed has a problem in their meeting on Wednesday. We told subscribers the market usually takes a couple of days to react to CPI. CPI reported its 3rd .3 month-to-month in a row on Thursday which is inflationary.

It's now been a couple of days and guess what, we have another inflation spike coming with oil on top of the delayed CPI reaction. Saudi Arabia was attacked which is likely sending oil prices higher.

That oil price spike and 3 .3 CPIs in a row have to bother the Fed ahead of their Wednesday decision. What's more they've pretty much previewed a rate cut is coming this week. Uh oh. Inflation is jumping and they have to be deer-in-headlights now with oil.

I think they end up cutting rates but they are going to have to tell the market to cancel future rate cuts. If they cancel this one markets are going to take a whack (that's a technical term).

We have calls upcoming with: FIVN, AMD, AMZN, DELL, TER, TTD, SPLK, NVDA, and TXN.
We just had meetings with: AAPL, A…

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