PPI Doesn’t Matter – Here’s Why

The Producer Price Index (PPI) number is out today – but let me tell you why it doesn’t really matter…

Yesterday’s CPI increase directly relates to inflation, because if prices are going up, that means inflation is on the rise.

On the other hand, the PPI number is the change in income that the producers of products and commodities earn – at the first level of the supply chain…

The PPI doesn’t seem to influence, correlate to, or make any direct impact or affect whether we can predict what prices will be in the US going forward.

Journalists will try to use PPI numbers to confirm that inflation is on the rise – but in reality, PPI doesn’t necessarily have any bearing on the prices we will see in stores in the US.

So, don’t pay attention to it.

What DOES matter, is what is happening in the market today…

And currently, all I see is selling… SPY is down to 371.52 from the open around 376…

We might see continued selling all morning, or the market might try to recover –

Either way, I will be holding off to see what happens before I set up today’s SPX butterfly in the Profit Revolution.

Because the market is currently selling off, I am looking for names to potentially short in the short/medium-term.

I think these stocks are moving lower short-term…

1. Exxon Mobil Corp (NYSE:XOM)

XOM is approaching $80. If it falls below $80, it is a good long term buy AND I’ll look for a good put sale.

Image from wallstreet.io

Implied Volatility (IV30 RED LINE) is slightly lower than the Historical Volatility (HV20 BLUE LINE), so we might be able to find a “cheap” put trade here.

 

2. Apple Inc (NASDAQ:AAPL)

Today is the beginning of the drop for AAPL. Bank earnings were bad, and AAPL is the last bastion of safety for the market… this could be the sign AAPL is going to $130 or lower.

Image from wallstreet.io

3. Snap Inc (NYSE:SNAP)

SNAP is going to break $10 in the next down move. I would be looking for medium-term $10 puts and/or a put spread.

Image from wallstreet.io

I will be looking forward to checking out options on these names during the Profit Revolution.

See you tomorrow morning at 9:30 a.m. (ET) for the Profit Takeover.

Until next time,

Mark Sebastian

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