The Inflation Trap Nobody's Talking About
In a Nutshell
CPI report worse than expected at 3.8% (highest since May 2023), driven by surging oil and gas prices up 65% in six months, outpacing wage growth and eroding consumer purchasing power—markets dipped (QQQ -1.1%) but remain irrationally optimistic, ignoring inflation risks like potential rate hikes. Historical 2022's 9.1% inflation led to 12 months of sell-offs; current pullback offers day trades but demands caution—no leverage, small position sizes, larger time frames, and no aggressive shorts amid reversals. Join LPP live trading for calculated plays during uncertainty to protect capital and end the year green.
These notes were generated by AI and may contain inaccuracies.
NASDAQ market QQQ is currently down 1.1% after the CPI report was released, which came out worse than expected. Some claimed the market does not care about the inflation report and would only go higher, but the market will always care about the inflation rate eventually, despite temporary irrationality.
Think back to 2022 when inflation reached 9.1%, a 40-year high. The Federal Reserve raised interest rates to slow the economy. Markets sold off for nearly 12 consecutive months. Prolonging or ignoring inflation leads to more negative market impact due to recovery needs.
In today's live trading session with the LPP team, markets are selling off, but inflation on both core CPI and overall CPI is going up, which is not ideal for the Federal Reserve. Markets remain irrational; e.g., Trump tweets manipulate sentiment over the past 6-7 weeks. This is a nice pullback in the bigger picture—no crash, no real sentiment change, not enough fear. Room for quick day trades, but not a huge home run.
Some stocks like SanDisk were down 8-9% at one point. Most stocks are barely selling off from open, even overvalued ones. Be very careful shorting the market now. The market is red, but showed buying pressure at open, pushing to highs of 710, forming new lows but ripping back up, forming lower highs. Be careful with position size and exposure, especially beginners.
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