Revised CPI Data Brings Buyers Into Stock Market, Hopes Of Whales Driving Bitcoin To $50K Over The Weekend

To gain an edge, this is what you need to know today.

Revised CPI

Please click here for an enlarged version of the chart of SPDR S&P 500 ETF Trust SPY which represents the benchmark stock market index S&P 500 (SPX).

Note the following:

• The chart shows the revised CPI data brought in buyers to the stock market.
• The chart shows that volume continues to be low. This indicates that so far there is lack of conviction in the move. However, this can change very quickly.
• The stock market has been eagerly waiting for CPI revisions as there have been times in the past when such revisions caused major moves in the stock market.
• A year ago, when inflation appeared to be coming down, revisions completely changed the picture.
• As of this writing, the complete data is not yet available. Here are the details known so far:
  • Q4 Core CPI is unchanged at 3.3% annualized.
  • December CPI revised to 0.2% from 0.3%.
  • December Core CPI is unchanged at 0.3%.
• Bond yields are slightly lower after the CPI revisions.
• The sum total of the revision data so far is positive for the stock market.
• As more data becomes available, it may move the stock market. CPI for January will be released next Tuesday at 8:30am ET.
• Adding to the AI frenzy is the news that OpenAI CEO Sam Altman wants to raise $5T - $7T for manufacturing AI chips. He appears to be trying to raise the money from oil rich nations.
• As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents.  Please scroll down to see the protection band.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Apple Inc AAPL, Amazon.com, Inc. AMZN, Alphabet Inc Class C GOOG, Meta Platforms Inc META, Microsoft Corp MSFT, NVIDIA Corp NVDA, and Tesla Inc TSLA.

In the early trade, money flows are mixed in SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust Series 1 QQQ.

Momo Crowd And Smart Money In Stocks

The momo crowd is buying stocks in the early trade. Smart money is inactive in the early trade.

Gold

The momo crowd is inactive in the early trade. Smart money is inactive in the early trade.

For longer-term, please see gold and silver ratings.

The most popular ETF for gold is SPDR Gold Trust GLD. The most popular ETF for silver is iShares Silver Trust SLV. 

Oil

OPEC+ oil production declined by 340,000 barrels per day according to a survey. This caused a big move. Also, hopes of a ceasefire between Hamas and Israel have diminished.

Yesterday saw a big move up in oil. Today, there is a slight pullback.

The momo crowd is buying oil in the early trade. Smart money is inactive in the early trade.

For longer-term, please see oil ratings.

The most popular ETF for oil is United States Oil ETF USO.

Bitcoin

There are hopes that bitcoin whales will take advantage of the low liquidity over the weekend to drive bitcoin to $50,000.  As a result, bitcoin is seeing aggressive buying.

Sentiment in Bitcoin BTC/USD is very positive.

Bitcoin miners are being aggressively bought.

Protection Band And What To Do Now

It is important for investors to look ahead and not in the rearview mirror.

Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider a protection band consisting of cash or Treasury bills or short-term tactical trades as well as short to medium term hedges and short term hedges. This is a good way to protect yourself and participate in the upside at the same time.

You can determine your protection bands by adding cash to hedges.  The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive.  If you do not hedge, the total cash level should be more than stated above but significantly less than cash plus hedges.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.

Traditional 60/40 Portfolio

Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.

Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of seven year duration or less.  Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.