Inflation Keeps Surging, Markets Sell Hard As Concerns Grow Over Stagflation, Gold, Silver, Bitcoin

[00:00:00] Speaker 1: My name is Gareth Soloway and I was a losing trader until I mastered technical analysis. Logic and charts beat hype and narratives every time. Now I teach investors the same techniques that made me a multimillionaire. This is my trading game plan. Good morning, everybody. Welcome to my trading game plan. My name is Gareth Soloway, Chief Market Strategist here at Verified Investing. And what a morning has started out to be here as we got the CPI data prints. And again, CPI stands for Consumer Price Index. And it is an inflation gauge based on what you and I experience when we go out and purchase goods and services. So let's jump into that right now here, folks. What do we have? We have the October CPI month over month coming in hotter than expected. In addition, even the core, which is minus food and energy, coming in one tenth hotter than expected as well. And the market had really been anticipating a drop in the month over month numbers. And that's why it's such a dramatic situation where we're seeing the S&P futures drop, the NASDAQ futures drop, silver gold drop, Bitcoin drop. It's again an exodus of basically risk assets. And why is this a negative? Well, number one, inflation is just a negative and it's not going down. It's basically staying standard or going up. And that's even in spite. Recently, we've seen a drop up off in oil, right? So when it comes down to it, the markets were anticipating a slowdown in inflation on a month over month basis. Instead, we got hotter numbers. And that essentially ices the cake, meaning the Fed is going to raise in December. And now all of a sudden it brings up the question, does the Fed need to raise more next year in 2027? And that again is why the markets are coming down. So let's take a look at the S&P futures here and see exactly where we are. Markets were trading basically sideways going into the open after that phenomenal rally yesterday. Then we got the CPI data out and you can see immediately about an 80 point drop in the S&P futures, which is a sizable about a 1% drawdown. Now we are getting a small bounce here in the S&P futures on the 10 minute chart. But again, big drop, small bounce. Basically, we have to wonder how much of yesterday's big rally are we going to negate? Now, if we take a look here at the chart of the NASDAQ, we go to the 10 minute chart. Same thing. The NASDAQ futures were just briefly around 28,000. We collapsed down to 27,590. Now we're trading back to 27,720. All right. So again, big drop there. Now, if we flip over to the S&P and look at yesterday's move. Now, what I'm going to tell you right here is a very key factor in what kept me bullish even when this major trend line broke. And it's called the confirmation signal. And the confirmation signal essentially guides you to whether or not something's a real breakdown or a fake out. Okay. Now, institutions like to fake retail out because essentially they know that the trend line is there, right? I mean, it doesn't take a genius to draw a line on a chart. But what they know is that retail will get very scared and dump their longs on a break of that trend line. In addition, they know that shorts from retail will jump on board. Now, the key is if it confirms it goes from a 50/50 reality of a breakdown, which is what we had last Thursday. So it was 50/50. Was it a breakdown last Thursday? We were down 4% on the S&P real breakdown or fake out 50/50. What we were looking for is whether or not it confirmed. Now, to do confirmation, what you're looking for is a secondary close below the low of that initial close. And you can clearly see on Friday we did not confirm. And then ultimately big surge back above this trend line. This has served me incredibly well in not getting off sides. In other words, if the institutional money is willing to devote enough that it actually confirms the breakdown, chances are they're not reversing it. In other words, the odds favored by about a 3 to 1 margin or even as much as 75% that it's a real breakdown if it confirms. If it has been confirmed, 50/50. Could be a fake out, could be not. Don't get too crazy over it. And that's what we saw last Thursday. Now, it doesn't mean we're not going to come back down in a few days and actually close below it and confirm. But we need to be monitoring that closely. All right. So, either way, we are here, folks. Again, what we're seeing is the S&P futures will be opening down just a little bit down here. We'll be watching this. But we have recaptured this key major trend line on the S&P. Now, flipping over to the dollar, let's take a look at the dollar. And again, we're kind of seeing a little bit of a problem here with trading view not loading. But you could see the dollar is trading up on the morning session. That is because it is a safe haven asset. So, again, the dollar is seeing money rotation in. The dollar is moving up. And what is that doing? It's pushing us in to see essentially gold and silver coming in. Bitcoin may be a little pressure there as well as the dollar gains ground. All right. So, again, we'll continue to monitor that. I do want to take a look at the 10-year yield. The 10-year yield here is pushing up as well, which makes a lot of sense, right? If you think about it logically, we know that higher inflation means the Fed is going to have to raise interest rates more aggressively. In fact, Waller, one of the Fed governors, one of the Fed presidents, came out in the early morning today. And my guess is he knew the number ahead of time. All these guys, they know the number ahead of time, right? And he actually floated the potential for a 50 basis point hike in December. And again, I looked at that earlier before the CPI number. I said, that doesn't make sense. Like, you know, oil's coming down, this, that. And now it's like, oh, that's why it makes sense. So, we'll watch and see how it goes. But yields are pushing up again, back to 4.958%, 4.958% on the 10-year yield. And the dollar, as we mentioned, is stronger. Now, turning our attention to a couple stocks out there. Earnings-wise, there's not a whole lot. HIMSS reported not moving much. ONON reported here. That stock is dropping a little bit in the early session. You can see it trading down here. But essentially, what I'm looking for on ONON, it would have to drop down to about 31.75 to get interested on that trade setup. Now, some of the other ones I'm eyeing very, very closely were looking very closely at Sandisk. Now, Sandisk, I was long as of last week, right? On Friday, I picked up some Sandisk, beaten down play, oversold, kissing technical support. Yesterday, jumped, banked it. We went on our merry way. Huge bounce yesterday. Now, today, as it comes back in, I'm looking at this key level down here, all right? This is going to be around 7.75 to 7.35. This zone is likely to be major technical support. So, I already have my buy level if Sandisk comes in enough here, all right? Flipping over, Microsoft looks to be opening slightly lower, but still staying relatively strong. Tesla here, down slightly after a two-day monstrous bounce with the S&P. And let's flip over to gold here. Gold is coming in as well. All right, so again, gold has had a tremendous bounce, but as soon as those rate hikes start looking more obvious or more likely, and the dollar begins to climb, gold is going to come back in. If gold comes back in, you want to re-watch this 38.75 area right here, this previous low. If that breaks, you still have a potential for a $3,500 target on gold. Silver, same thing. Big drop today on silver, down about 3%. Same thing. We're watching this zone right here, which if we go to the bigger timeframe, you can see going back to 1980 to 2011. That's the zone we have gone into. We haven't touched the low end of it yet, which may still be needed. That's around $45 per ounce. But again, below 50 to me, as you guys know, I started to accumulate long-term holdings in silver, and I'll add about every $5 down beyond that. All right, so a couple other things here. Oil, oil continuing down. The president coming out and basically saying, effectively, military action with Iran is over. Again, I don't know if that's a negotiating tactic, if it means there's something else going on there, if he's going to follow through. But oil continues to go lower today, down another 2%, trading at $84.57. Now, again, I think the price drop on oil got a lot of people expecting that lower CPI read on the month-over-month, and that did not happen. Why didn't it happen? Well, frankly, I have a feeling that inflation is very inbred in this market. Again, when you have diesel prices, and all these producers of goods, and then shipping the goods is costing more and more, they're not going to raise the price of those goods in one month to compensate, but they're going to spread it out over a couple months. Really, until oil stays down for a significant amount of time, you likely will see continued high inflation going forward. Again, that's just something that, unfortunately, is likely to be inbred in the market. And part of that, too, by the way, I think a lot of producers of goods, they held back from raising initially when the war broke out with Iran and oil spiked up. Because the common thought, and I even thought this, I said, oh, it'll be a couple weeks. Then, all of a sudden, it went from a couple weeks to a couple months. And then, all of a sudden, we're approaching 10 months of high oil prices. At some point, those producers that were like, you know what, it's probably a couple week thing, I'm not going to raise prices. They have to eventually raise prices or their margins go out the window and they're not making money anymore. And so, I think we've gotten to that point where these producers are now raising those prices of goods and services. All right, Nat Gas here, guys, continuing. What a move up on natural gas. Continuing today here. Remember, the key is going to be this level right here around 315 on Nat Gas. It's got to break out and confirm. Notice, closed above, got a lot of people bullish, never confirmed, and then they pulled the rug out from under you. Learn that signal, folks. It is a game changer to learn the confirmation signal, which I teach in the Winning Traders series, along with so many other proprietary signals. All right, so, natural gas continues to stay strong today. We'll watch that. Bitcoin continuing to drop. Remember, Bitcoin closed below 75.5. Yesterday, it reattacked 75.5. Today, right back down, it goes. And it opens the door, not only to 67,000. That's kind of a worst case scenario. But there is a secondary trend line I'm watching right here. If we just connect low pivot to low pivot, this would be that first level around 70, just below 72,000, where I would expect some sort of support. To come out if Bitcoin flushes. But let's be fair. Going back to the S&P futures, we can see, again, big drop on the CPI. A little bit of a rebound here. But every eye is now watching. Again, we have PPI coming out in just a couple days. We're going to watch that economic data. And continuing to watch oil prices is key, as well as Fed watch tool. Like, what are the odds? Right now, it's almost a deadlock, meaning that there's almost very little chance they won't raise rates in the December 9th meeting. But again, the question that I have is I'm basically saying, OK, they're going to raise rates then. The question I have is, do they have to do it more in 2027? I was kind of penciling in December and done. But if inflation doesn't come down here, it's going to create a negative scenario. All right, guys, so that's where we are right now watching some of these semiconductors retrace high quality names, low PEs. But only if they get back to these key levels will I rebuy. I'll keep you guys in the loop. Go have a great rest of your day, guys. Let's make it a profitable one. Talk to you soon. Take care.