The CPI Countdown: Defense First

Fresh news and strategies for traders. SPY Trader episode #1400. This week marks a crucial convergence of highstakes economic data and corporate earnings. We face potential market turbulence driven by Friday's critical CPI release, which will test interest rate cut optimism. Prepare for volatility, stay defensive early (overweight XLV), and tactically limit exposure to growth stocks (underweight QQQ) until the inflation outlook is clarified.

Episode Transcript

(00:00):
Welcome back to Spy Trader .
I'm your host , Barry Cash , ready to dive into what is shaping up to be a brutally important week for the markets .
It's 6 am on Sunday , October 19th , 2025 , Pacific , and we are staring down a massive convergence of highstakes economic data and critical corporate earnings .

(00:22):
Get ready for volatility , folks , because we are navigating a minefield this week , likely characterized by a moderately volatile , slightly bearish bias until we get some clarity .
The focus is swinging hard away from geopolitics and back squarely onto Federal Reserve policy , specifically inflation .
The biggest data point of the week , hands down , is the Consumer Price Index , or CPI , released Friday .

(00:50):
The consensus expects inflation to rise from 2.9% to 3.1% yearoveryear .
If that number comes in hotter than expected , it will severely test the market's current optimism about future interest rate cuts and trigger a sharp selloff , especially in ratesensitive growth stocks .
Before the CPI data bomb drops , we have highstakes corporate earnings .

(01:13):
Netflix ( NFLX ) reports after the close on Tuesday .
Analysts are optimistic , expecting strong subscription and revenue growth , which could provide a significant tactical boost to the entire Communication Services Sector ( XLC ) and the Nasdaq 100 ( QQQ ) .
We also have good news reinforcing the Technology Sector ( XLK ) , with recent updates about Broadcom ( AVGO ) securing significant orders and partnering with OpenAI , confirming the strong underlying demand for AI infrastructure .

(01:50):
Our overall strategy this week needs to be defensive early on .
The S&P 500 managed to hold above its 50day moving average last week , which is a mild technical positive , but investor caution is high .
The Technology Sector ( XLK ) and Communication Services ( XLC ) are highly volatile .

(02:11):
They will soar if CPI is cool but will be the first to sell off hard if CPI is hot .
We are seeing classic defensive positioning already , with Healthcare ( XLV ) logging a resilient 1month return of 1.78% .
This is where traders seek shelter during periods of high macroeconomic data risk .

(02:32):
Now for the trades .

Recommendation one (02:34):
Overweight the Vanguard Health Care ETF ( XLV ) .
XLV is a core defensive play .
It offers stability and less sensitivity to interest rates than the large growth funds , making it ideal for capital preservation ahead of Friday's CPI volatility .

Recommendation two (02:53):
Tactically Underweight the Invesco QQQ Trust ( QQQ ) .
QQQ is the most vulnerable instrument to a negative inflation surprise .
Limit your exposure until the inflation outlook is clarified .
And finally , keep a keen eye on Netflix ( NFLX ) before Tuesday’s earnings .

(03:14):
If you are betting on a beat , a small hedged position is a tactical option , as a strong report could provide a shortterm lift to the entire growth complex .