November’s Consumer Price Index (CPI) report arrived yesterday – and it was just what stocks needed to continue rallying.
That is, this most recent batch of data showed that inflation continued to run as expected last month. In response, the stock market soared, and odds for a December rate cut popped to 99%.
It seems Christmas may come early for the markets this year.
According to the Bureau of Labor Statistics (BLS), CPI increased 0.3% in November, after rising 0.2% in each of the previous four months. Now, that figure does reveal a slight uptick in inflation on a month-over-month basis. But the index also reflected a 12-month inflation rate of 2.7%, which is in line with consensus estimates.
Inflation seems to be in a fairly good place right now. For example, as the BLS stated, “the index for all items less food and energy rose 0.3% in November, as it did in each of the previous three months.”
Though, of course, as has been the case for a long while now, shelter costs continue to weigh on the overall inflation rate. That is, the index for shelter rose 0.3% last month – “accounting for nearly 40% of the monthly all items increase.”
As we’ve mentioned in previous issues, high shelter costs seem to be a supply issue, largely out of the Federal Reserve’s control. But it seems that many Fed officials and economists expect housing-related inflation will ease as new rental leases are negotiated. So, we’ll continue to wait and see how the data shakes out in that regard.
Otherwise, November’s CPI report broadly confirms that the economic backdrop is supportive of continued stock market strength.
And given this bullish setup, we think it may be the perfect time to try our new “ultimate stock screener.”
A Solid Market Backdrop for Continued Gains
Right now, the stock market itself looks fundamentally, technically, and sentimentally strong.
Indeed, fundamentally speaking, sales and earnings across the S&P 500 are rising. For many firms, earnings growth is expected to accelerate over the next few quarters. Inflation continues to run soft or in line with expectations, which means the Fed is likely to keep cutting rates. And the incoming administration’s pro-growth and deregulation policies should further stimulate economic activity next year.
That’s a great fundamental backdrop.
Technically speaking, the S&P, Nasdaq, and Dow Jones – the three major market indices – are all pushing to all-time highs. Each is trading in strong uptrends with very healthy-looking moving averages. And each is supported by great technical conditions right now.
And then sentimentally, as recently reflected by the NFIB Small Business Survey, small business optimism has been soaring to its highest levels since June 2021. Meanwhile, the University of Michigan reported that consumer sentiment rebounded again in December – after recovering in November as well.
Across the board, the market looks quite strong right now. So, why not take advantage of a brand-new stock screener to uncover the stocks with the most promising setups out there, and then ride them higher?
The Final Word on CPI and Today’s Strong Economic Setup
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If that sounds rare, that’s because it is.
Indeed, in its latest scan – completed just this week – Auspex analyzed more than 14,000 stocks to find those that met all its strict fundamental, technical, and sentimental criteria. And of those 14,000 options, just 10 made the cut.
That’s less than 0.1%.
And this highly selective screener has shown great success in our various back tests, consistently outperforming the broader market – sometimes by a whopping 10X. It has also excelled in real time, delivering positive returns in every month we’ve used it internally since the early summer.
With various fundamental, technical, and sentimental tailwinds helping to reenergize the markets, we think this is the perfect time to give Auspex a whirl.
It has proven to be an excellent tool – and one you should add to your arsenal right now to get ahead in 2025 and beyond.
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On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.
