In the final minutes of trading today all three major indexes turned red.

This marked the sixth day in a row for losses in the S&P 500.

The stock market held positive most of the open session despite continued higher inflation numbers showing in the U.S. Bureau of Labor Statistics Producer Price Index (PPI) report released before trading began.

Simpler’s traders are holding to a “hurry up and wait” attitude toward this market with more economic numbers set to hit the stock market tomorrow morning.

PPI numbers boost stock market losses in final hour

Inflation numbers came in higher than anticipated with the PPI showing annual inflation popping to 8.5% year over year for September results. The number is down from 8.7% in August, and the lowest in more than a year.

But it wasn’t enough to send the stock market higher as the major indexes floated near flat throughout the day.

In the market today, the Dow closed at 29,210.85 points to lose .10% (dropping 28.34 points on the day). The Nasdaq slipped to 10,417.10 points for a .09% miss while the S&P 500 dropped .33% to 3577.03 points.

PPI tallies of costs – less food, energy, and trade services – rose .4% in September, the largest rise since increasing .5% in May. For the 12 months ended in September, the bureau stated, these core index prices moved up 5.6 percent.

Ongoing rate increases from the Federal Reserve (Fed) don’t appear to be taming inflation as quick as the market, or consumers, would like.

Watching Fed, market reaction to inflation numbers

Simpler’s traders continue to watch how the market and the Fed react as each of these economic data releases hit the news wires.

The ongoing trading plan is to stay out of the way of any unexpected twists in the market.

John Carter, Founder of Simpler Trading, is sticking to his strategy of foregoing extended risk associated with swing trading and accepting that the risk of day trading is the better play. He holds that getting in and out of the market daily wins against holding overnight risk in swing trades.

“I like the flexibility of waking up flat and not having any disasters to try to work my way out of, and that’s kind of nice,” John said.

His plan is to continue flowing with the market as it reacts.

Traders will watch the Fed and its aggressive stance toward inflation while day trading with a focus on the S&P 500 (SPX) for income opportunity day trades and avoiding leaning into buy possibilities in a market that keeps finding a way further down.

‘Fear’ index sets up in volatile pattern

John has a keen interest in monitoring Volatility Index (VIX) levels along with continued strength in the U.S. dollar.

John has marked a pattern in the VIX – the “fear” index – that hints at market movement.

When the VIX drops to 20 in this scenario stock prices move higher toward a top, and as the VIX climbs to 35 prices start to fall.

Traders see the index as a measure of how the stock market reacts to news. The VIX anticipates market volatility over the next 30 days and anything above 20 is considered high volatility.

When things have looked most ugly this year, according to John, the VIX has been at 35. The VIX closed at 33.5 today, and broke 34 in during early and mid-afternoon trading.

At this level, John is avoiding getting aggressively short, and he’s not looking to commit to long plays either.

“We are at some extremes in the VIX and that can drive price action,” John said.

The market, and traders, are waiting on the Consumer Price Index (CPI) report on Thursday.

Dollar stretches influence across the world

John is also watching how the dollar is exerting influence over the stock market.

“The entire world is a derivative of the dollar,” John said. “If the dollar is strong, almost everything else on planet earth is weak. This is the market that is driving everything.”

The dollar impacts other currencies, commodities, stocks, bonds, mortgage rates, inflation, and U.S. based international corporate costs and profits.

John noted that the last stock market “explosion” to the upside coincided with a pullback in the dollar.

“Now that the dollar is rallying again, stocks are down,”John said.

He doesn’t expect a sharp decline in the dollar anytime soon. The dollar held above $113 through the day Wednesday.

Traders’ eyes on technology, banking sectors

Simpler’s traders still have eyes on the technology and banking sectors.

Technology leaders such as Apple, Inc. (AAPL) and Tesla, Inc. (TSLA) have been steadily declining all year.

John pointed out that these two leaders – which make up 20% of the Nasdaq (and are strongholds in the Dow and S&P 500) – appear to be stuck in their own bear market. Apple has fallen from a high of $179 and Tesla from a high in $383 this year.

“They can really impact those indexes,” John said.

John is also watching the banking sector, particularly Goldman Sachs which is in a continued downtrend where it can’t seem to break higher. Goldman Sachs has historically been an influence in how the market moves.

“So goes Goldman Sachs, so goes the market,” John said. “It’s been continuing to struggle.”

Simpler’s traders keep key stocks in these sectors in their watchlists as a gauge for how the market is responding to ongoing releases of economic data.

And the elephant in the room continues to be the Fed and how it continues the fight against 40-year high inflation.

John believes the Fed faces a decision on whether officials there want to wreck the economy to bring down inflation.

“To get back to 2% (core) inflation you need an economic depression at this point,” John said. “Or, will the Fed learn to live with 4% inflation?”

This is a baseline, challenging scenario for traders to navigate through the end of the year, and possibly through next year.