The markets are in no mood to cooperate. Investors are once again selling stocks, and momentum is back in the red. It’s very choppy right now. This is why I advise investors to keep their trailing stops tight and their fingers on the sell button if limits execute. With negative momentum, I need to take additional time to manage active trades. Today, we took a 100% winner off the table at Surge Point Trader in the uranium space. It’s a reminder that you can deliver wins even in broader market momentum. But it’s an additional reminder that even when things run hot, you have to take profits and not hold and pray.
I’m very bullish on uranium prices over the next month, but today’s switch in momentum gave speculators reason to take profits and those who came in late to the party on Cameco Corp (NYSE:CCJ) a reason to panic and sell. I am already calling a bottom on a new uranium trade, one that I’ll talk about next week here at Haven Investment Letter. For now, Surge Point Trader readers are looking at a great trade that could double by the end of October.
Negative Momentum on the Consumer Price Index
This morning, I made a bet with a friend that the consumer price index would come in much higher than consensus expectations. After all, the producer price index (which measures inflation in the supply chains) was at record growth levels year-over-year. The CPI was at 5.3% year-over-year. That’s an incredible pop, but it was under expectations. Now, I dug into the numbers, and something seems off. The numbers suggest that food prices are up just 3.5% year-over-year, while energy prices are up 25%.
I don’t know about you, but my food cost is up about 7%, while energy is probably up 50%. I don’t know who is in charge of these numbers, but if they were working on a house, and the house’s walls were off by such an obvious miscalculation, they’d be in jail.
As I noted, inflation is still running, and wage increases will push prices higher – as will shortages and challenges in the supply chains. I’m expecting that we could see big moves in rents in the future, which is good news for real estate investment trusts (REITs) that have built-in inflation clauses to negotiate rents. I’ll talk about a few of them tomorrow.