Good morning, traders…
The stock market (and the U.S. economy, for that matter) can be a confusing place.
Sometimes, two conflicting truths can exist at once. It’s our job as traders to decide which truth is most applicable to our trading strategy.
Yesterday’s Producer Price Index (PPI) came in at a blistering 0.9% increase for July, far above the 0.2% most economists were expecting.
That’s the biggest monthly jump in wholesale inflation since June 2022, and it’s got Wall Street’s hopes for a September rate cut wobbling.
But just a few days ago, the story seemed different. Last week’s Consumer Price Index (CPI) rose a modest 0.2%, in line with expectations.
The moral of the story? You never know what the market will throw at you. That’s why I follow the Smart Money. They know facts we don’t. They anticipate surprises before those surprises become international headlines.
And when inflation data starts playing hide-and-seek like this, it’s the Smart Money that stays several steps ahead.
Let’s Look At 6 Names Getting Huge Smart Money Flow Following This Week’s Big Inflation Shock…
6 Charts I’m Watching Post-PPI
The Trade Desk Inc. (NASDAQ: TTD)
The chart is forming a rounded bottom with a series of higher lows. If it breaks above $57.40 resistance, it could fill the gap. The longer-term concern is Amazon stepping into its ad space. That’s a cloud over the stock. Still, we saw large call buyers step in yesterday.
The Walt Disney Co. (NYSE: DIS)
It bounced off its point of control and pushed right into the 21-day moving average, forming a tight breakout pattern. October $125 calls were getting scooped up. If it breaks out, we could see it move into the $120s quickly.
Shopify Inc. (NYSE: SHOP)
This chart has a post-earnings wedge forming. It gapped up, pulled back, and now it’s holding support. Break that upper line, and we could see the momentum return. Options activity suggests interest in both near-term and longer-dated calls.
Confluent Inc. (NASDAQ: CFLT)
CFLT is stabilizing after a big post-earnings drop and Smart Money buyers are stepping in. If it reclaims resistance, this could be another juicy slow burner (like TTD).
Amazon.com, Inc. (NASDAQ: AMZN)
The e-commerce giant is finally filling its post-earnings gap with strong price action and volume. This is the exact setup I’ve been waiting for. Watch late August/early September $235 calls.
JD.com Inc. (NASDAQ: JD)
JD recently reported quarterly revenue equal to its entire market cap. Let that sink in. EPS was soft, and sentiment’s in the tank, but a company this cheap (with that much cash coming in) deserves a watch.
Now let’s zoom out and look at two broad sectors.
Airline and defensive names took a hit after the PPI. American Airlines Group Inc. (NASDAQ: AAL), Delta Air Lines Inc. (NYSE: DAL), United Airlines Holdings Inc. (NASDAQ: UAL), and JetBlue Airways Corp. (NASDAQ: JBLU) all dropped.
Same with defensive names, like Verizon Communications Inc. (NYSE: VZ), AT&T Inc. (NYSE: T), Walmart Inc. (NYSE: WMT), The Coca-Cola Co. (NYSE: KO), and PepsiCo Inc. (NASDAQ: PEP).
But now, they’re looking ready for quick upside reversals (if the market internals improve).
I’m watching closely for reversal patterns and slingshot moves as a ton of red-to-green setups are forming.
PPI is shaking the trees. Now it’s time to see which ones fall (and which ones stand tall).
Happy trading,
Ben Sturgill
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*Past performance does not indicate future results
