Coach Mark here.

CPI (the consumer inflationary data) came out this morning and it came in a little hot. My brother and I will break down all the numbers on the Halftime Report today but for me this morning I am not trying to figure out a complex macro narrative in one sitting (there will be time for that in the coming days). What I am trying to do this morning is manage a Volatility Pocket.

On the Trading Justice podcast this weekend my brother used the phrase Volatility Pocket to describe a situation that can occur when markets are overextended and overbought and the fundamentals do not quite line up with the price action. That is the situation we felt we were in as we started the trading week and you can listen to the podcast here.

It is not surprising given the analysis on the podcast that we have a touch of volatility on a news report that was not a perfect one for the bulls. Markets are settling a tad but it has been a wild morning of price action! Does volatility mean the market crashes? Of course not as an increase in volatility can lead to wild swings in both directions. Volatility simply means volatility.

An increase in volatility can take a minute to settle down and get into the new “normal.” Until then on a morning like this I am making sure I am doing sensible decisions to make sure I can weather the volatility pocket the best I can. I certainly do not feel the need to be a hero this morning.

We will break it all down in the Halftime Report today! Have a fantastic Tuesday.

Chart of the Day: The Dollar ($DXY)

A good look for the dollar which often means a bad look in other places. An important chart that will have extra scrutiny put on it in the coming days as a strong dollar that is trending can put a lot of pressure in other areas of the market

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