Market Report: Inflation is Transitory
By Todd Horwitz on
May 9, 2021 at 10:34:51 AM
Market Report Inflation is Transitory
Todd Horwitz Chief Strategist BubbaTrading.com
Be Prepared not Surprised.
Another week and more new highs. If you haven’t noticed that market recognizes no bad news as witnessed by Friday’s jobs number. We saw one of the worst job numbers in years with a rising unemployment rate. However, the bad number is likely to keep the cheap money rolling and the FED rates at zero.
On top of a bad jobs number the FED now has a new word for the unrecognized spiking inflation. The word is transitory which is their way of keeping rates at zero and missing their moving target of inflation. Add to the mix the ridiculous stimulus and employers can’t find people to work. All of this adds up to new highs in markets.
The option market basically stayed the same with call buyers leading the way followed closely by bull put spreads. The VIX continues to drop because of the cash secured puts and covered calls being sold. Out of the top 10 strategies only three lead to a bearish sentiment. The option market continues to signal more new highs to come.
What is surprising is the leadership that continues to propel markets higher. Although the Nasdaq was lower last week the top of the list of bullish symbols continue to be tech related. The top five are AAPL, DKNG, MSFT, QQQ and AMZN. The bear side is being led by SPY, XLF, VXX, ZM and PTON.
This is a strange market based on the leadership but every week we see more new highs. The message the market is sending is the same, there is nowhere else to go, and investors will continue to chase yield. Don’t try and pick the top, go with the flow until something changes.
Todd “Bubba” Horwitz