I won't spend much time poking fun at J.P. Morgan and its crazy game plan that I wrote about on Tuesday for how investors should trade following yesterday's Consumer Price Index data, but let's be honest. Any time folks start talking about 8% to 10% rallies or declines based on a single data point, it's probably a good time for an eye roll.
J.P. Morgan's guess of a rally of 4% to 5% if year-over-year inflation came in between 7% and 7.2% wasn't too off the mark. But given that the SPDR S&P 500 ETF (SPY) only managed to hang on to 0.75% of its nearly 3% gain at Tuesday's regular session open is a clear indication that traders still view this as a bear market.
It's impossible to look at the price action in the major index ETFs and not view Tuesday's price action as disappointing. However, Fed Chairman Jay Powell may say something in this afternoon's news conference that reverses yesterday's regular session selling.
The truth is that while some inflation figures are supportive of a peak inflation argument, Powell has been clear regarding his wage-based inflation concerns. And given the stickiness of wage inflation, I am not remotely convinced that the Fed is ready to do anything more than slow its pace of tightening. But hey, hope springs eternal for bulls sniffing around for the next bull market.
Away from the indexes, several traders have pinged me asking what my view is on Tesla (TSLA) , especially considering the stock's decline on Tuesday. Some traders may argue that yesterday's high-volume decline in the electric carmaker is representative of a selling climax, but I don't see it.
Yes, volume was above a 30-day average and the highest this year. However, the 14-period Relative Strength index (RSI) isn't close to being oversold, and on a weekly chart, the stock looks like it's making a run toward $120. I'm not a huge fan of short-selling, but if I were, that's the only direction I'd be looking when it comes to TSLA.