Daily Rundown: May 12

JD DURKIN: Good morning members, one and all. AAP team member, Bob Lang, joins me now for his perspective on this week's trading, of course, as well as his thoughts on some of the charts that you all have been asking about. Bob, good morning. Thank you for being here.

BOB LANG: Great, to be with you, JD.

JD DURKIN: It was certainly another economically significant week with the SLOOS report, CPI, PPI, givING the central bank plenty to digest for the weeks ahead. Talk to me about what most stood out to you. What do you think should most be atop the radars of AAP members?

BOB LANG: Well, I the things we're going to slow down this week after such a big week the prior week with the Fed meeting, Apple earnings, and the non-pharm payroll report, but obviously, some new stuff to consider this week. But I think markets did not really take the ball and run this week, JD, which has been the case with recent readings from inflation actually, since beginning of November when the CPI number started to come down.

Every time we'd get a inflation report like the PPI or CPI report, or personal consumption expenditures, the market seemed to take it as good news and would rise up. And actually, Wednesday morning, JD, we did see the markets take off in the pre-market, but then failed to hold those highs and dipped all the way down and came all the way back. But then yesterday, it was really kind of just a ho-hum day on some pretty decent numbers from the PPI. So I'm not sure if that is a change in character for the market or not, but certainly, make no mistake, these numbers were very hot still, and the Fed is not going to loosen up or pivot from these numbers whatsoever.

JD DURKIN: A ho-hum day indeed. Now, the debt ceiling meanwhile is a story that I we all wish, my goodness, we could stop talking about, but we can't because it's still very much front and center. Is there any advice that you can share, Bob, with members as that June 1 deadline from Treasury Secretary, Janet Yellen, gets a bit closer?

BOB LANG: It's hard to imagine, JD, a worst case scenario here, but the media frenzy is making everyone hysterical. Frankly, the US has always paid its bills in over almost 250 years of our country. Sometimes, they get delayed. A couple of times earlier in the century that happened, but we're not seeing as much worry in the bond market. And that's really what I'm paying attention to, nor in the dollar over this. The dollar is not going crazy down.

The debt ceiling, pretty much this whole debate here, it's all political. Of course, it's casting a pall over the market. But when it's over, I think we can finally move on.

JD DURKIN: All right, let's talk about volatility, the CBOE Volatility Index, better known as the VIX. Some people make affectionally refer to it as the fear index, been a bit of a roller coaster as of late, the VIX now sitting at around 16. But of course, we need some context, some perspective for what that number actually means. Bob, what does that tell you about trading in the days and the weeks ahead?

BOB LANG: Well, the implied move on a VIX that's sitting at 16%, JD, is that the market would move about 1% per day. That's basically the expectation of the implied move. This week, actually, we saw the markets move about 1% the whole entire week. So it moved about 1/5 of the expected move implied by the VIX.

Putting that another way, if the VIX was priced for what the market actually moved this week, the VIX would be at about four, maybe three. So we're obviously not there. So it's interesting that markets are really complacent right now. They're not really paying attention to fear or worry down the road. They don't see much impediments to markets going up.

But we still have not seen the price action move in tandem with that lack of fear in the volatility market. So I think that dip buyers pretty much have been active of late. And whenever the markets come down as we saw this on Wednesday when the markets came down about 1%, and they rallied right back as the dip buyer stepped in there and picked up the pieces. They've been active.

But what happens when they decide not to enter back into the markets? And markets are going to swoon. Breadth has been awful, JD. Put call ratios have been on the rise. And the options market here is portraying a much more bearish view going forward.

JD DURKIN: Bob, earlier this week charted the S&P 500. You noted the 4,200 level as an area of interest. As you and I are having this conversation, it's right about 4,140. Which is out to you then? And do you feel the same as we close out the week today?

BOB LANG: Yeah, you know what? I'm all about prove it to me. And frankly, the S&P 500 hit a high in early part of February, about 4,192 to 4,196. And since then, we've made attempts to get up towards that level, but we've been rejected every single time. So that means that sellers live above 4,180 4,190, and they're willing to let go of stocks and sell markets down materially if we hit those levels.

So I would actually upgrade the range. And I've spoken recently about the range being about 3,800 to the downside, which is where we started the year in 2023, JD, to about 4,200 to the upside. That's about a 400 point range. Let's call it at about a 10% range there.

But I would really be willing to say 4,050 to the downside is about as low as we'll go unless we get a big pop in volatility. And we just talked about volatility being too low right now. So if we get a move down to 4,050, I suspect that buyers are going to pick up the pace and start buying stocks.

JD DURKIN: All right, let's chat about a few of the club's holdings here, Bob. This week took a look at the chart of ChargePoint. That was an alert that went out to members, of course. They may be familiar. They may remember that one.

It's a name we talk an awful lot about, and not always for the best reasons to be fair. But I do understand that you're seeing some positive signs. Break down those positive signs for me. What are you seeing over here?

BOB LANG: Well, you know, competitor EVgo reported their earnings this week. And while they weren't great, they actually did back their guidance for the rest of the year. We've often see ChargePoint move in tandem in lockstep with Tesla interestingly enough, because obviously, there are a charging station for electronic vehicles. So it makes a lot of sense.

But we've seen those two stocks diverge, but it's possible we could see the ChargePoint start moving again with Tesla. Some news came out this morning that Twitter is finding a new CEO. And perhaps, that means that's good news for Tesla because Elon Musk is going to back off from his duties over at Twitter and spend a little bit more time working with Tesla. We did see Tesla up a little bit this morning, and actually rallied back towards the close yesterday when this news, or rumor of this news came out.

So I think that ChargePoint has certainly made a move above the 20-day moving average, if it can hold it up there. It has a little bit of runway up towards the 10.50 to $11 area. We did add some ChargePoint recently below nine and 1/2 dollars. And we think that over time, long-term, JD, that ChargePoint is going to be one of our best holdings down the road.

JD DURKIN: Bob, while I have you, let's talk Axon. Despite strong earnings, we did see that stock plunge earlier this week on Wednesday. What does that chart tell you about what might be next for that particular stock?

BOB LANG: It's interesting about Axon here. The stock made a huge move back in February with earnings, made a big move up on some really heavy volume. Now, obviously, investors were disappointed with this latest reading, which came out on Tuesday night, and the stock plunged on as you mentioned, on Wednesday. But the volume levels were not nearly as high as they were when the buyers stepped in in February.

So I noted that as telling me what? That really there's not much conviction from the big buyers or sellers coming in, and distributing the stock and getting rid of Axon. Also, it means this, is that Axon has been on the radar screen of dip buyers for a long time. And a lot of these players had their stops in the same place.

So once the stock plunged on Wednesday morning, JD, right through those stocks a pile of sell orders came out. And you know, listen, if you're a market maker, if you're making a market in Axon, and you know a whole bunch of sellers are coming in, why in the world would you want to step in there and start buying it until all those sell orders are done?

I think that might have finished up on Wednesday. We'll have to see what happens. The stock made a nice rebound yesterday on some pretty good volume. If we get a little follow through here, and we get above that $220 level, JD, I think that the stock's got some legs. We did pick up some shares on the cheap on Wednesday after the stock got pounded on that day.

JD DURKIN: All right, Bob Lang, thank you as always.

BOB LANG: Great to be with you, JD. Have a great weekend.

JD DURKIN: You as well, my friend. And as a final programming note to all of you members watching at home, our next live members call kicks off Wednesday the 17th of May at 12:00 PM Eastern time. We have a jam-packed show ready for you all with Helene Meisler joining Chris Versace, as well as The Street's Editor-In-Chief, Sarah Silverstein, for a technical and fundamental review of the portfolio, as well as answers to some of your biggest questions about the club. Until then, Chris and I will be back on Monday morning to get ready for another busy week ahead. Have a great weekend, my friends, and we'll see you then.