The Waiting is the Hardest Part

Biggest rally in two weeks, eh? With all of the bearish talk I'’ve been making, you would think I'’d be upset about this, but I'm not. My portfolio, which I outlined last week, is doing great. (Mostly thanks to STP my solar power company which reported earnings)

Core PPI was reported today, and unexpectedly fell .03%. This eased inflation fears, allowing the bulls to make another "Fed is done” rally".

For those of you confused about all of this technical jargon on the economy, let me sum up the two things that are still moving the market:

1. Inflation- when the prices of goods go up. (due to an increase in available cash & credit)
2. Stagnation- when the economy's growth slows. (due to slower spending habits of consumers)
3. Stagflation- when the economy's growth slows while prices of goods are going up.
   

Stagflation is a problem because tools for directing the economy can't fix it.

Our economy is still slowing and we may switch into bear mode soon, which would create a hard landing. But some pundits like Jim Cramer have been predicting a soft landing. I've not heard anyone take the middle road on this issue, a mild stagflation that would allow the economy to slow, but still eek out a gain. I'’m not convinced of anything yet.

Wall Street is trading on the data day-to-day so there is no long term trend yet.

The S&P500 is breaking a crucial level of 1280 to the upside, as the MACD crosses, and moves above the 0 line. This is good for the bulls, and makes me wonder if that double top around 1325 will take place. This being said, hold off on the DXD and SDS as the bulls may have some short term strength.

Wal-Mart (WMT) gave earnings today with its first year over year profit decline in 10 years. Their earnings call alluded to an unconfident full year guidance with concerns of high gas prices. If Wal-Mart isn't suggestive of the American economy, I don'’t know what is.

Tomorrow at 8:30Eastern Consumer Price Index (CPI) will be announced, so hold on for the bumpy ride. Wait for a clear longer term trend and stay in secular or defensive plays.

Here is an article on interest rates and the economy from the New York Times. (Don'’t read unless you'’re truly interested, as it is on the boring side)

Buy Amgen & Sirius. The risk/reward is just too good at these levels.

*Edit* Core CPI rose .02%, slightly positive for bulls. We are now at a 25% chance of a rate hike.