May 23 Premarket Repost

The stock market selloff is being “blamed” on the China situation, just as it was being “credited” for the rally on Monday. This whole thing about people who write about markets is a total joke, completely incompetent. Always looking for a rear view mirror “reason”.  I have repeated over and over that the stock market is getting acclimated to the higher interest rates, and it will, but at the same time, shorter-term, 273-274 is a big resistance area to me. This was all discussed again on Monday:

“The stock market is rallying “because of” the trade tension news with China. Months ago we discussed that this trading area here in the stock market, this pause in the secular uptrend, is completely about getting acclimated – from April 27:

“..and we still have a bond bear market to deal with, the stock market is slowly getting acclimated to that, but – it won’t be easy.”

And again, the 273-274 area in the SPY is a solid resistance area to me, and this news rally today will have to deal with that.”

So now, the relative volume needs to be watched, a big pickup in that and this then becomes more of a problem a bit bigger picture. Meantime, 271 support, and below 270 is the gap, for shorter-term stuff.

 

There is a good post here about trading and psychology, etc from Stevie.

 

Some updates on the 4/2 stock list.

BFAM, RSPP, MEOH, VIPS, VNOM, LE, LULU, URBN, AEO, ANF, GES, CTRN, M, NWY, PEN, TEAM, DBX, FIVE, FND, SQ, SGH, WHD, IQ, FUSZ, AMAG, ETFC, INSM, MU, ETSY, CREE, INTC, OBE, LOXO, CLNE, GWPH, ARQL, WDAY, CLDR, EC.

ARQL hit a new high, up 30% from 4/2, and much more from the proper, to me, buying area.

This was given to all of you on 4/12, as to how to get a much better entry point, and buying into the reaccum area, which turned into a spring. Always opportunities to buy and to sell, two parts of it.

“ARQL, no position, but that one given as it is also in an accum area, but into the top and needs to back up.”

 

 

URBN has earnings out, were very good, here, above expectations, but it’s always about the reaction to earnings news.

 

 

Inflation is really picking up (article below), bank lending rules were made more flexible (more inflation) – and is monetary velocity finally turning up?

I have long argued that interest rate increases “cause” inflation, not the other way around:

From Dec 2015:

The reason is that my technical work convinced me the short term interest rates were about to explode higher. And explode they have – 3 month, 6 month and 1 year TBills are at 7 year highs – up by 10 -20 times from the lows. And to repeat the Fed does NOT lead the bond market, they FOLLOW. And when the Fed does catch up to the bond market, short term rates will begin to move even higher. Expect to see a flat yield curve within 18 months as the 10 year yield will stay stubbornly low for a while before also exploding higher…Finally, to repeat it is NOT falling, but it is rising interest rates that will lead to increasing inflation..”

The article below discusses transport/shipping. Logistics stocks are one of the strongest sectors. I love strong stocks. The leaders in the group, with excellent earnings growth – EXPD is the leader, but overextended. ZTO, FWRD, and SNDR are all strong stocks with good earnings.

 

 

I have posted several small energy shares over the last month, outstanding opportunities. EGY doubled. EGE and EPY were two of them, first discussed 5/8, update a few days later. (Currently both EGY and EPE now seeing some EA coming in):

From 5/10 (and 5/8):

EPE and EGY more rallies, plenty of opportunities. And opportunities to potentially take some profits also, EPE up 50% from the reaction low – in one day:-”

From 5/8:

And those small energy shares are outstanding opportunities. Yesterday’s premarket I posted 2 more of them, EGY and EPE. EGY, +30%, was the #3 stock of the day, (BLNK, +50%, also posted yesterday, the #2 stock of the day). EGE was down in the early part of the day, ripe for buying, then closed up 4%. And after the close came out with solid earnings guidance. Big accum area in EGY, less so in EPE, and both stocks had opportunities yesterday, anyone who read yesterday’s post had an opportunity, when crude had an emotional spike lower before the announcement. All I can do is lay out the opportunities.”

The original charts:

 

 

BTC has had a big selloff from the spike rally and my recent comments about it, using the “last high before the low” 8700 resistance area, now it is getting back into a good support area.

For those of you reading the Q and A stuff, SENS was discussed outstanding runner stock, with that intraday chart. Big rally today again, to me putting in a huge top (process):

 

 

 

 

 

From CNBC,

Investors and policymakers have gone looking for inflation over the past decade and largely have come up empty.

It could, however, come barreling at them soon like an 18-wheeler.

Multiple signs of inflation in freight-related industries are at or near historical highs, in what could be an early sign that price pressures are building and ready to reverberate around the economy.

Freight marketplace DAT keeps track of supply and demand in the freight industry through a bulletin board that matches companies with loads to be delivered to the vehicles that will take the goods to the marketplace. The measures are in the spot market, where vendors that don’t contract their deliveries find drivers for their products.

Recent readings show demand for vehicles skyrocketing, a sign that generally points to inflationary pressures building up in the supply chain.

“It’s an indication that there’s capacity pressure in the marketplace, that brokers are searching more and posting more in order to find a truck,” said Peggy Dorf, market analyst at DAT. “This is an indicator that pressure is much higher than it was a year ago.”

Metrics the firm uses to track demand for trucks are showing a sharp increase and outstripping the number of drivers available. Supply-demand dynamics, then, would indicate rising rates for trucks that could lead to pricing pressures on a broader level.

Loads on the spot market in general are up 100 percent from the same period a year ago. Another measure, flatbed load-to-truck, which tracks the amount of vendors looking for flatbeds and is generally the highest of all truck types, is up 142 percent.

Every other broad market trend line that DAT posts was up double digits on a year-over-year basis — including the all-important fuel costs, which are up 20 percent.

“Trucking in general is a leading indicator,” Dorf said. “If the economy is also growing, it’s one of those rising tides [that] lifts all boats. The pressure on the spot market doesn’t seem to have let up.”

The numbers by themselves, though, don’t indicate that inflation is ready to strike soon. Indeed, the most recent readings, such as the consumer and producer price indexes, show inflation pressures rising though relatively benign.

But they do jibe with some other indicators showing inflation is rising beneath the surface.

Also, the New York Fed’s Underlying Inflation Gauge, which goes beyond more popular data sets like the consumer price index, rose to 3.2 percent in April, its highest reading since July 2006. The Atlanta Fed’s Sticky-Price CPI gauge, a measure of goods whose prices are less prone to fluctuation, was up 2.5 percent in April, its highest level since February 2017.

 More than 50,000 truck drivers needed now  

Now, the rapid increase in trucking demand is beginning to gather attention, with some corners of the financial markets wondering how long it will take until broader inflation gauges are impacted.

“When you have price pressure that is above and beyond what’s normal, someone has to eat it,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “The truckers are obviously going to charge more for their services because they can, the buyers of that stuff who need the trucks are not going to eat the cost. They’re going to do their best to pass it down.”

While the most recent reading of the producer price index showed just a 2.6 percent gain over the past 12 months, the freight subindexes told a different story: truck transportation jumped 6 percent, rail was up 5.1 percent and air rose 3.9 percent. Overall, the general freight trucking component is just below the all-time high it hit in February.

General freight trucking component of the producer price index, from 2008-present.

Source: FactSet

“Demand is still exceeding capacity in most modes by a significant amount. In turn, pricing power has erupted in those modes to levels that spark overall inflationary concerns in the broader economy,” Donald Broughton wrote in the most recent Case Freight Index Report, a widely read industry publication.

While Broughton said he believes technological improvements will offset long-term price pressures, he added that transportation indicators are showing noteworthy levels.

“April’s 12.8% increase [in the Case Freight Expenditures Index] clearly signals that capacity is tight, demand is strong, and shippers are willing to pay up for services to get goods picked up and delivered in modes throughout the transportation industry,” he wrote. “We should also remind readers of a fundamental rule of marketplaces: volume leads pricing. Repeatedly we have watched in a host of different markets, that volume goes up before pricing starts to improve and volume goes down before pricing starts to weaken.”

And the pricing indicators are quietly pointing higher.

Spot market rates for flatbeds were at $2.71 a mile for the week ending May 12, just a penny off the record they had set the week before, according to DAT. A number of trucking companies reported big rate jumps in the first quarter. Daseke said its rates were up 10 percent for flatbeds, while Universal Logistics Holdings said revenue per mile excluding fuel surcharges rose 12.7 percent annually, according to a Journal of Commerce report.

The surge in demand has led to driver shortages and sharp pay increases, which ultimately likely will be passed onto consumers.

“We’re paying a lot more than we ever had,” Robert Ragan, chief financial officer with Melton Truck Lines, recently told CNBC. “We’re in a unique operating environment right now in the transportation industry, where demand is at an all-time high and supply of qualified drivers continues to dwindle. We have a hard time filling our trucks, and pay is skyrocketing.”

It all adds up to an environment that could prove tricky ahead.

The Federal Reserve is continuing to raise interest rates, with at least two more quarter-point hikes expected this year. Central bank officials watch a number of indicators, and if more start flashing inflation signals, that could mean a faster pace of rate hikes ahead.

“It’s inevitable that prices will go up,” Boockvar said. The Fed is “on autopilot now, unless things accelerate on inflation.”

 

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About traderscott 974 Articles
Trader Scott has been involved with markets for over twenty years. Initially he was an individual floor trader and member of the Midwest Stock Exchange, which then led to a much better opportunity at the Chicago Board Options Exchange. By his early 30’s, he had become very successful in markets, but a health situation caused him to back away from the grind of being a full time floor trader. During this time away from markets, Scott was completely focused on educating himself about true overall health and natural healing which remains a passion to this day. Scott returned to markets over fifteen years ago where he continues as an independent trader.

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