Can This Rally Survive July’s CPI Data? And How to Trade RIVN Earnings

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Trying to make sense of bear market rallies is like trying to explain U.S. foreign policy to a fourth grader — and I’ve been struggling to do both! At a certain point you just throw your hands up in the air and scream, “Because that’s how it works!” I’m still in the camp that sees recent price action as nothing more than a bear market rally in 2022, and not a regime change back to a bullish tape. This week, we’ll shift back from a focus on jobs and earnings to the dreaded inflation gauge, the Consumer Price Index. Last week, there was a lot of thrashing around and markets ended up mostly unchanged with the S&P 500 up just 0.64%.  Underneath the surface, the action was anything but...  We saw the apes return to AMC Entertainment Holdings Inc. (NYSE: AMC) and GameStop Corp. (NYSE: GME), huge takes in semiconductor stocks on the back of the pork-filled “inflation reduction” bill, and more selling in oil. After a massive bullish move in July, it’s normal for the market to digest those gains and consolidate sideways for a while. But at some point, the sellers will come back as they sense the rally is exhausted. I see a few potential catalysts as you’ll read below… Look Ahead: The Week’s Economic Numbers That Matter Wednesday’s latest CPI data: 8.7% expected — Last month, “experts” expected 8.8% CPI and instead got 9.1%. That massive number shook the markets, but only for a moment! You see, markets took the hot inflation number in stride and made a July bottom the following day on July 14. Since then, the S&P 500 is up 11%.   But here’s why another strong number won’t create a rally...   We already know energy has cooled off some… but the increasing share of inflation in services (the blue graphic) is a big unknown. Look for a CPI read of 8.7% or lower to create a last-gasp rally on Wednesday that I’d expect to fade fast. If we see another monster reading above 9%, you should see a dramatic sell-off.    Earnings I’m Watching This Week Rivian Automotive Inc. (Nasdaq: RIVN) — Thursday Electric car-maker Rivian missed its last earnings number in a big way, and the stock jumped 17.96% that day anyway! The options market expects volatility, with the implied move at plus or minus 10.05%...    My take is that we’ll see some selling here…  We saw Lucid lower production targets, and RIVN is still guiding 22,500 for targeted auto production this year. A guide lower and this stock will get executed. I’d target a test at least back down to the 50-day moving average at $30.42.* Remember to check your inbox on Friday for a recap of the week to see how it all played out!    Joy of the Trade P.S. Even though many traders’ accounts are down…   I’ve been crushing it with my favorite HEDGED strategy: Money Flow Elite! Get the Details Here *This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.    A WealthPress Publication   ABOUT US:  We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. WealthPress provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from Wealthpress LLC are for your informational purposes only. Neither Wealthpress nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. Wealthpress is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions.  Please visit wealthpress.com/terms for our full Terms and Conditions. Manage Your Email Preferences Unsubscribe This email was sent by: WealthPress 7751 Belfort Parkway #120 Jacksonville, FL, 32256, US Joy of the Trade Update Profile

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