We just got an even better idea of U.S. inflation.
It’s not looking pretty…
Tech stocks are in freefall, but my favorite trade might surprise you.
There’s an AI-adjacent stock ready to spike.
On Wednesday, the CPI hinted at higher prices. On Thursday, the hammer dropped…
As investors run for cover and AI stocks fall, I’m still eyeing calls on a specific tech-related stock.
It’s at a key area on the chart where our risk is small, and the potential gain is massive.
Don’t lose your head alongside the rest of the market.
Follow the setup at the top of my watchlist.
The PPI
We covered Wednesday’s CPI inflation data in this blog.
Then, Thursday’s wholesale report gave us another glimpse under the hood…
The Producer Price Index (PPI) jumped 1.3% in September and 6.3% year over year, the biggest gain since 2022. The expectation was a 0.6% increase and 5.5% year over year.
Energy drove more than 80% of the gain, and wholesale gasoline alone surged 20.3%.
The part that worries the market the most… core wholesale prices (excluding food and energy) rose 5% from a year ago, up from 4.6% in August.
It’s confirmed: this isn’t just energy inflation anymore. It’s spreading throughout the entire economy.
Plus, wholesale prices give us a glimpse of where consumer prices will go next.
Which means this could just be the beginning…
As a result of the inflation data, the S&P 500 ETF Trust (NYSE: SPY) fell 1.11% on Wednesday and gapped lower on Thursday as traders dumped tech stocks.
The pressure on the Fed is growing…
Before these inflation reports, traders saw less than a 25% chance of a rate hike this month. Now it’s close to a coin flip.
The Fed meets on October 28.
Moody’s Mark Zandi warned that if interest rates stay high for more than a quarter or two, AI spending could be the part of the economy that breaks.
That’s the main fear. But as a trader, I’m not worried.
I get to sit in cash until I see a setup that matches my patterns. Speaking of which…
My #1 Watch
Everyone wants to own the AI winners: NVDA, MSFT, GOOG…
But the companies building the AI future need raw materials. And NVDA isn’t a mining company.
Data centers, power grids, battery storage… they all run on metals like nickel, copper, cobalt, and manganese. Demand for these critical minerals isn’t slowing down, and supply is tight.
It’s the classic “picks and shovels” play: instead of betting on which AI company corners the market on software, turn to the materials they’ll need.
And one name is at the top of my list…
TMC the metals company Inc. (NASDAQ: TMC)
TMC has had a rough run. The stock is down nearly 48% over the past six months, and it sold off hard over the last several sessions with almost no relief.
But moves like that can overextend. Sellers run out of steam, and suddenly the stock snaps back violently.
One of the best ways to tell if a stock is overextended… look at the price in relation to popular EMAs.
Now look at the price level where TMC is trading: just above $2.50.
That level acted as support back in early 2025, before TMC ran to over $10 per share. It’s a multi-year level that buyers have defended before.
Here’s how I’m approaching the trade…
I’m using $2.50 as my risk. If TMC breaks below that level, the setup failed. Get out.
Buying contracts as close to that level as possible means we risk very little.
And because short-dated options are so sensitive to price changes, even a small bounce off support can translate to exponential gains.
Small risk. Massive potential reward.
That’s exactly the kind of setup I want to trade while everyone else panics.
Be good (and be good to others),
Ben Sturgill
*Past performance does not indicate future results. Not typical.
