Is Inflation Coming Down? Trading Amazing Market

By Andrew Aziz  |  
Andrew's Newsletter  |  
Jun 8, 2022
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Dear Traders,

My apologies for missing Monday’s trading session. I went through an Ayahuasca experience over the weekend, and I needed Monday morning to sleep in and digest more of my intense experience. Brian and Thor did some amazing trades on AMZN on Monday morning, which now after its split is around $120, and that’s perfect for our trading style! Today, I traded AMZN for a nice 1-minute ORB down, as well as executed some other scalps. You can watch the recap that Brian and I posted here.

At Bear Bull Traders…

I have included below a table of our upcoming webinars and mentorship sessions.
 
Today, for Tuesday Strategy, John will be presenting a webinar focused on the Break of High of Day Strategy. John has been trading this unique breakout strategy almost exclusively since early 2020. For tonight’s webinar, which starts at 8pm ET, he will discuss how to handle the strategy’s high momentum setup as well as the entry / execution criteria necessary to create high probability success conditions.Tomorrow, for Wednesday Psychology, beginning at 5pm ET, Créde will be leading a presentation entitled: The Art of Setting Goals. Most people are aware of the importance of setting SMART goals to achieve a target. But the art of effective goal setting actually goes much deeper than that. This webinar explores goal setting through the paradigm of “process, performance, and outcome goals”. When you set effective goals, the need for willpower decreases. The process of goal setting itself will create motivation, confidence, and momentum to help you reach even your highest ambitions in trading and in life.

At Peak Capital Trading…

Tonight, our boot camp participants are invited to attend a webinar led by Mike entitled: Selecting the Right Journal Criteria to Evaluate Your Strategy. Mike’s presentation commences at 6pm ET. On Wednesday, Aiman and Dimah will be leading a webinar focused on how to manage your position in the midst of your trade. They are up at 11am ET.

And Finally…

Has the market bottomed? This is the billion-dollar question that I am sure everyone is asking. Inflation is the main driving force of the market, and the market only starts to head toward an all-time high when the economic indicators bottom and go into the fight direction. So far, we have not seen that. Inflation is the main key to driving the economy, and inflation is controlled by supply and demand. If you increase the supply of goods and services, and lower the demand of consumers by tightening their savings and borrowing costs (interest rates, mortgages, etc.), and add in a bit of unemployment, inflation eventually will come under control.

On the supply side, three of the key supply indicators driving today’s global inflation levels have already turned around and are coming down, meaning relief from increasing prices could be on the horizon for shoppers worldwide. These three indicators are:

  • A bellwether semiconductor price — a barometer of costs of electronics products as diverse as laptops, dishwashers, LED bulbs, and medical devices delivered worldwide — is down 14% from the middle of last year.
  • The spot rate for shipping containers — which tells us more about expenses we can expect later in the year — has declined 26% since its September 2021 all-time high.
  • North America’s fertilizer prices — an indicator of where global food inflation is going — is 24% below its record high in March.

These indicators are going into the right direction, but we are still far from a 2% inflation target. A moderation in supply-side pressures could eventually allow central bankers to slow their tightening cycles and be less aggressive in their interest rate hikes.

On the demand side, reports show that Americans continue to spend. That’s the message out yesterday from the Bank of America.

I’ve read a few interesting articles thus far this week. One referenced that consumer spending in the US remains healthy. It’s higher than it was in 2019, 2020, and 2021, which is good, and does not indicate a recession. However, with inflation adjusted, spending levels are below year over year, which means Americans are spending more but taking less home. That is why companies like Target have gapped down and are under pressure due to a surplus of inventory. Concurrently, inflation worries customers, and they are therefore moving toward lower-priced vendors such Lowe’s and Dollar Tree, both of which are performing better.

To your success,
Andrew

PS: If you have not already, I urge you to try out our free web-based trading simulator at stocktradingsimulator.com. It’s conveniently available 24/7, whenever you have time to practice honing your trading skills.