Welcome back to Hitting the Bid Weekly!

Softer inflation and strong earnings fuel a breakout to new highs

A solid win for the “Up” voters this week with the S&P 500 (via SPY) rocketing higher on Friday and following through on Monday. The index climbed +2.1% for the week, closing at $685.24 after hitting a new all-time high of $685.54.

The week started off quietly, then Wednesday and Thursday brought some back-and-forth price action with wide ranges. Friday ended the week with a huge gap up after the release of CPI inflation data. Despite inflation rising to 3% for both the headline and core readings, the results came in softer than expected. This all but confirmed a 0.25% rate cut at this Wednesday’s Fed meeting, which is generally viewed as a tailwind for equities. Combined with mostly strong company earnings and renewed optimism around trade and global growth, stocks pushed back toward new highs on Monday.

Early in October, it seemed like markets were headed for a scare. Now, it looks like equity bears fumbled the ball and the bulls are back in control. It may have been the last chance for skeptics to push prices lower. With two months left in the year, the question now is how hard buyers can push into year-end.

Other key market moves this past week:

*Data release may be delayed due to federal government shutdown

Not an exhaustive list — just a few I’m watching closely for potential market impact.

Carvana earnings could offer a read on consumer strength and market sentiment

With most government data delayed, I’ve been looking for other ways to gauge the consumer. One way is by tracking company earnings that offer clues on where people are spending their money. To see whether discretionary habits are shifting, I’m watching Carvana (CVNA), which reports earnings after the close on Wednesday, October 29. The report will give us a glimpse into whether buyers are keeping up with rising car costs and if loan delinquencies remain stable. The results could act as a meaningful proxy for mid-market consumer strength. If it holds up, the consumer picture may be better than feared. If it falters, it could be an early warning sign of tighter budgets.

Over the past three years, Carvana has pulled off a massive turnaround, with the stock price climbing from around $3.50 to as high as $413 in July. After such a parabolic move, I’m waiting for the post-earnings reaction before making any trades. The current implied volatility rank is about 42, elevated ahead of earnings. If it stays above 25 after the report and the earnings move is under 5%, I’d look for a directionally-neutral setup by selling an iron condor, a strategy that benefits from falling volatility and time decay. If the earnings move lands in the 5–15% range, I’d wait until the end of the week to see if there’s follow-through before entering a contrarian trade: a bullish setup after a down move, or a bearish setup after an up move. Because of the high stock price, I’d keep positions risk-defined by using vertical spreads, i.e. selling a put spread on a down move or a call spread on an up move.

How engaging with the world can make “luck” more likely to find you

When I reflect on how I got to where I am, I sometimes think about the concept of the luck razor. It’s the idea that when you’re faced with two paths, you should choose the one that increases your “luck surface area.” The more you engage with the world, the more likely luck will find you because you’re creating opportunities for it to happen.

A few moments stand out for me. While looking for a post-college job, I was on-site for an interview at a nuclear plant. In a group session, our host asked if anyone could explain how steam drives the turbines. Everyone looked at each other, waiting for someone to answer the question. The silence was pretty awkward so I broke it and gave a somewhat choppy answer. But I happened to be “lucky” that the head of HR was in the room. She later told me she appreciated that I didn’t wait for someone else to speak. I got the job, and that became the foundation for much of my career. I firmly believe doing something as simple as raising my hand was integral to getting it.

Another instance came while trying to fulfill my inner nerddom and curiosity about technology. Around a decade ago, I came across a forum post about network decentralization and cryptography. This led me down a rabbit hole which eventually got me to Bitcoin. I had no idea it would ever make the moves it did, but my willingness to explore led to a pretty “lucky” investment.

And one of my luckiest moments came in 2019. The Saturday before St. Patrick’s Day in Chicago can get pretty rowdy, with the river dyed green and bars opening at 7 a.m. I was out with family and friends that day. We ended up at a party, but by mid-afternoon everyone decided to head home. I chose to stay out with a new group of people I’d just met. That decision led me to meet someone who, six years later, I can’t imagine life without. “Luck” strikes again.

None of these things would have happened if I’d chosen the path with the smaller luck surface area. We’re often faced with choices between staying in the familiar or branching into something new. It doesn’t mean taking random risks or chasing lottery tickets. It means considering risk and reward but being open to discomfort, creativity, and connection. Expand your network. Explore new interests. You might find that good fortune has been waiting to meet you halfway.

P.S. Want to see more of my trades? Subscribe to my YouTube channel.

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Hitting the Bid content is for informational and entertainment purposes only. The information contained is not, nor is it intended to be, trading or investment advice or a recommendation of any security, futures contract, digital asset or alike. I may hold a position in the trading vehicles discussed. Trading and investing contains risk. All investors should evaluate their own risk tolerance, financial situation, and investment duration before entering any trade or investment.