Panic Buying Carries On. Bad News Is No Longer a Brake.
The US PCE price index rose 3.8% year-on-year in April, up from 3.5% in March. Core PCE, excluding food and energy, came in at 3.3% year-on-year. These are not numbers that support continued rate cuts. The personal savings rate fell to 2.6% in April, the lowest level since 2022, meaning American households are drawing down savings to cover daily expenses because income is not keeping pace with prices.
The rate cut cycle is nearing its end. If the Hormuz situation keeps energy prices elevated and PCE stays above 3%, the Federal Reserve may begin hiking rates again as early as early 2027. That is a significant shift in the macro environment. Yet the market does not care. Iranian forces fired on four ships in Hormuz, China banned cross-border US stock trading, savings rates hit near-historic lows, and the indexes went up anyway. In a confirmed bull market, all news has one result: prices rise.
Inflation Is the Real Story This Week
The Hormuz Strait has been pushed to the background. PCE and CPI are now the market’s primary focus. The rate cut cycle that began in late 2024 is running out of room, and the Iran war is the accelerant. Dallas Federal Reserve President Lorie Logan warned this week that a permanent Hormuz closure could force a drastic reduction in global oil and gas consumption, reinforcing the case that inflation is not going away on its own.
American households with a 2.6% savings rate have less cushion than at any point since 2022. That is not a soft landing statistic. That is a household stress signal. The market is pricing in AI and IT growth with enthusiasm while underpricing the consumer deterioration happening in parallel. The gap between Wall Street optimism and Main Street stress is widening.
Four Stocks, Four Different Entry Points
The challenge for retail investors is not direction. The direction is up. The challenge is entering without chasing highs. This edition identifies four approaches.
TIP (iShares TIPS Bond ETF) and SCHP (Schwab US TIPS ETF) have both just broken above the five-average line, placing them at the early stage of a rising wave. These inflation-protected bond ETFs benefit directly when PCE stays elevated. TIP closed at $111 with all five SMAs tightly clustered between $110.60 and $110.91. SCHP closed at $26.79 with a similar technical setup. These are not momentum plays. They are structural hedges that happen to be moving at the right time.
MU (Micron Technology) closed at $914.43 after a run from below $400 earlier in the year. Q2 FY2026 revenue hit $23.9 billion, up 196% year-on-year, with margins at 75%, driven by AI memory demand for HBM, DRAM, and NAND. The entry strategy here is patience: wait for the jumping gap to fill before buying. UBS has a bold target of $1,625, pushing MU toward a $1 trillion market cap, though analyst consensus sits closer to $525 to $570. The gap refill is the cleaner entry.
META (Meta Platforms) at $639.85 is trading below its 250-SMA of $676.81. When a stock is under the 250-SMA, the gap refill rule does not apply. The signal is to buy now rather than wait. META raised 2026 capital expenditure to $125 to $145 billion, triggering a sell-off, but Morgan Stanley and Jefferies both maintain Buy ratings with targets of $829 to $1,015. The paid subscription launch announced today signals a shift away from pure advertising dependency.
KWEB Falls as China Blocks Cross-Border US Stock Trading
KWEB (KraneShares CSI China Internet ETF) recorded $119 million in net outflows on a single Tuesday, its fourth consecutive day of outflows, the longest streak since April 1. China has banned domestic investors from cross-border trading of US stocks, a move designed to stop capital from leaving the country. The immediate effect is visible: KWEB closed at $26.42, more than 24% below its 250-SMA of $34.89. All moving averages are pointing down.
The broader China picture is not improving. Chinese authorities plan to confiscate illegal gains from Tiger, Futu, and Changqiao. Beijing is also pressuring European regulators to fast-track certification of the C919 aircraft by deliberately delaying Airbus deliveries, a coercive tactic that follows a damaging outcome: the C919 received zero orders at the Singapore Air Show. China’s capital controls may push investors toward alternative routing methods, but they are a structural headwind, not a temporary one.
What Investors Should Do Now
- TIP and SCHP (inflation-protected bond ETFs) just crossed above five-average lines: early entry in a rising wave before momentum builds
- MU at $914: wait for the jumping gap to fill; AI memory supercycle is real but gap refills offer better risk management than chasing
- META at $639, below the 250-SMA of $676: buy now without waiting for gap refill, current price is already a discounted entry
- ETF basket for the whole market: 3 QQQ, 2 VOO, 1 DIA gives full exposure without chasing individual stocks; QQQ runs 0.7% faster than the NASDAQ 100 annually, and DIA pays a monthly dividend you can reinvest
- Avoid KWEB: China’s capital controls are a structural trend, not a temporary dip; the ETF is in a sustained downtrend across all moving averages
Key Takeaway: PCE at 3.8% and a savings rate of 2.6% tell you the consumer is under pressure, but the bull market is so strong that even a likely 2027 rate hike cannot stop the panic buying. Clean entry points on TIP, SCHP, META, and MU will not stay open for long.
Related reading: Wave Theory and Average Lines · Interest Rate and Bond ETFs · Candlestick Patterns · US Stock Express Archive
Read previous US Stock Express editions here.
About the Author
Daniel Yue has been an active investor since 1980, with experience spanning stocks, currencies, futures, metals, and bonds. A scholar of the Chicago School of Economics, he holds a Certificate with Distinction from Cambridge University and a degree in International Trading from National Taiwan University. He served as Chief Analyst for over 30 years and Chief Mentor at Sincere Finance. In 2017, he received an award from the University of Arizona for financial internship leadership.
The analysis and opinions expressed in this article are for educational purposes only and do not constitute financial advice. Investing involves risk. Please consult a qualified financial advisor before making investment decisions.
About the Author
Daniel Yue has been an active investor since 1980, with experience spanning stocks, currencies, futures, metals, and bonds. A scholar of the Chicago School of Economics, he holds a Certificate with Distinction from Cambridge University and a degree in International Trading from National Taiwan University. He served as Chief Analyst for over 30 years and Chief Mentor at Sincere Finance. In 2017, he received an award from the University of Arizona for financial internship leadership.
The analysis and opinions expressed in this article are for educational purposes only and do not constitute financial advice. Investing involves risk. Please consult a qualified financial advisor before making investment decisions.