Poor positioning continues to drive the market higher as the July CPI number comes in lower than expected. Monthly CPI was anticipated to be at 0.2% but was flat for the month. Annual inflation is still running at 8.5%, which is a decline but still near a 40-year high.
The news caught market players by surprise, and there has been no "sell the news" reaction so far, although the indexes have run up quite a bit into the news. A "sell the news" response may have just been too obvious to work well, but thus far, there isn't much additional intraday traction, and the S&P 500 is already slipping a bit into the early gap.
I've raised my cash levels into strength recently, but I am looking for some good technical setups to buy. I'm not going to chase extended charts but will put more money into favorable-looking setups.
One setup that I like here is Beyond Air (XAIR) , which reports earnings on Thursday night. The company just received FDA approval for its LungFit PH system for the treatment of infants with hypoxic respiratory failure. The company should have comments about initial sales efforts, which I anticipate will be positive.
Another name I'm looking at is Verona Pharma (VRNA) , which was highlighted by Shark Biotech. The company might be at its primary endpoint in a study for the treatment of Chronic Obstructive Pulmonary Disease or COPD and should file a new drug application next year. Verona is doing a quick secondary offering, and I'm using that weakness to initiate a position.
This is a tough market to chase at this point, but charts should continue to develop as we digest the CPI news. Don't forget that we also have PPI Thursday.