CPI Day Gameplan
Considering both scenarios
The Likelihood of Another Miss
According to ZeroHedge, “a CPI-dependent market matrix from both JPMorgan and Goldman, as well as an analysis by Morgan Stanley” suggest today’s CPI numbers will be a big miss (meaning inflation trended down more than expected in December). As ZeroHedge notes, the last two CPI readings have been below expectations, following the six previous ones coming in hotter than expected.
If the Market Rallies on a Big CPI Miss
If the market rallies on a big CPI miss, it seems likely that the rally in most shorted stocks will continue.
If that happens, I may buy puts on one or two of them. The ones I have in mind aren’t simply overvalued stocks, but ones with disastrous fundamentals as well. It’s possible they peaked on Wednesday, but we’ll see.
If The Market Drops on Higher-Than-Expected CPI
If this happens, it’s possible we will get stopped out of one of our top names. In that case, we will replace it with one of the top ten names from Thursday night’s ranking on Friday.