Daily Rundown: October 12

BOB LANG: Good morning, Action Alerts Plus subscribers. It's Wednesday, October 12, 2022, time for our rundown. Lots to cover, of course, as always, so let's get to it.

So today's PPI release came out about 8:30 Eastern time, and it came in on the hot side one more time. 8 and 1/2% year-over-year inflation, which is showing nothing here for the Fed to do anything but increase interest rates as we move forward. Tomorrow, of course, we'll have the CPI number to contend with. Looking for another 8% gain year over year on this particular number.

Energy prices, as shown in this morning's report, remain sticky across the board and are helping to keep inflation elevated and probably will for some time. This is not a good thing for equity markets, of course, but at least the Fed is trying to arrest the problem with the only tool that they have, which is Fed rate hikes.

So as far as the technicals of the markets are concerned, with the close below the 3,600 level yesterday, the indices continue to flounder under-- and below resistance. Now, the 20-day moving average is dropping steadily each day and stands at about 3,740. It'll be much lower tomorrow.

Last week, the S&P 500 made a run to that 20-day moving average but was soundly rejected after that big rally on Monday and Tuesday and rejected there, and now we are really stretched away from that 20-day moving average, which means that we could see a big rally ensue. But again, we're looking for any rally up to that 20-day moving average could be sold viciously.

Absolutely true that last week's two-day run would likely run into resistance, and the big money took that opportunity to take money off the table and to sell into resistance. The NASDAQ weekly chart, of course, has my interest here, and actually has my concern, in that we're floating a little bit below the 200-week moving average. Now, the 200-week moving average is an important marker. And as we often say, nothing good happens below the 200 moving average.

If this fails again with another negative bar, which would be on Friday's close, there's potential downside for-- and wait for it-- 8,500 on the NASDAQ, so another 15% to 20% lower from where we currently are right now. The selling just has been unrelenting in the NASDAQ for months now. The NASDAQ 100, of course, is down about 33% in 2022.

So moving to the portfolio, we added a new name yesterday. And I'm going to say we've had our eyes on YOU for some time, YOU being Y-O-U, which is Clear Secure, is the new name that we added in the portfolio. Just a small amount we added to the portfolio here. It is a volatile name, of course. And it has great potential to do real well over the long period of time.

So, again, we like this company for maybe a two- to five-year horizon. But remember something. This is a low-float company, which means that there's not a lot of stock being traded out there in the name. There's not a lot of big institutions in the name that have stuffed it in their portfolios.

So we're going to have some big moves. This stock moves sometimes 7%, 8%, 10% in a day. So we took advantage of a little bit of a dip yesterday and added some dipped our toe in there and added some name to the name of Clear Secure in the portfolio. And we'll be looking to add some more as the stock drops. But please remember, this is a stock that's going to move a lot on a regular basis. So we started off small, and we'll add to it over time.

And then finally, we got some earnings this morning from one of the names in our portfolio, which is Pepsi. And Pepsi beat on the top and bottom line and also offered upside guidance for the next couple of quarters, which is really a refreshing thing to see in this tough market environment. This was a standout report, and we expected to see some higher prices from Pepsi down the road.

We have almost a full position in the name, so we're not going to be adding any more. But we'll tell subscribers that if you're a little light in the name and you need to add some more Pepsi, then this is probably a good spot to do it, in the 160s. All-time high's not too far away from here, and it did pull off those all-time highs from August and pulled back and gave a great entry point here for anybody who wanted to add to the name. So that's going to be it.

Thanks, everyone, for joining me, and we'll see you back tomorrow on the rundown.