Big Day on Tap With CPI, Retail Sales

Follow @MrTopStep on Twitter and please share if you find our work valuable!

Every week, MrTopStep invites traders to an “Own the Close” contest where the closest guesstimate where the SPX will settle on Friday’s 4:00 cash close.

The winners get a free week's access to the MrTopStep Chat and trading tools. Enter your guess now!

Our View

I could be 100% wrong, but while I thought we could see a hot number, I think the fix is in for today's CPI number. Below is what I posted in the MrTopStep chat at: 

• IMPRO: Dboy : (9:40:35 AM) : Powell may try and back up the idea of a rate cut still in front of tomorrows CPI release

• IMPRO: Dboy : (9:41:19 AM) : the fact that the rallied back up to 5250.50 after the drop down to 5216.75 after PPI say the powers / PPT could be at work

• IMPRO: Dboy : (9:41:33 AM) : different feel today

• IMPRO: Dboy : (10:26:40 AM) : powell painting the tape for tomorrow

In this case, it was all about the price action of the NQ. You could see it never wanted to go down in the early part of the day or any other part. We didn't see the big selling leading up to today's CPI release like we did over the last three releases.

Over the last two weeks, all that the back-and-filling in the ES and NQ has done is suck people in on the short side. Lastly, the 14th of the month is always part of the mid-month rebalance. 

Never sell a quiet market!! And that's all I have to say about that.

MiM and Daily Recap

The ES traded down to 5216.75 on Globex after the PPI numbers showed an increase of 0.5% in April and was up 2.2% on a 12-month basis, the biggest gain in a year. The ES then rallied back up to the 5250.50 level and opened Tuesday's regular session at 5246.75. 

After the open, the ES traded down to 5244.50 at 9:37, traded up to 5255.50 at 10:15 as Powell said the Fed expects a September rate cut, and sold back off down to 5242.25 at 9:38. From there, rallied back up to a lower high, pulled back to the VWAP 5245.25 at 10:18, ripped up to 5260.00 and pulled back to the 5242.25 at 10:38. After the pullback, the ES traded up to another new high at 5257.25 at 11:17, sold back down to 5241.25 at 1:22 and it was that low that set off a 30.25 point rip up to 5271.50 at  2:44. 

After the high, the ES pulled back to 5264.50, rallied back up to a new high at 5274.00 and traded 5269.00 as the 3:50 cash imbalance showed $3.8 billion to buy. From there, it traded up to 5274.25 and traded 5268.75 on the 4:00 cash close. After 4:00, the ES sold off down to 5266.75 and settled at 5269.00 on the 5:00 futures close, up 23.5 points or +0.45%, the NQ settled at 18,410.50, up 115 points or 0.63%, crude oil settled at $78.45, down 67 cents or -0.85%, the 10-yr note settled at 109'030, up 0.057 or +0.17%, and gold settled at 2,363.50, up 20.50 or +0.87%.

In the end, volatility, trade and volume picked up. In terms of the ES's overall tone, the ES and NQ were wishy-washy until the late rip higher. In terms of the ES overall trade, volume jumped: 215k traded on Globex and 974k traded on the day session for a total of 1.189 million contracts traded.

Technical Edge

• NYSE Breadth: 80% Upside Volume

• Nasdaq Breadth: 84% Upside Volume

• Advance/Decline: 66% Advance

• VIX: ~13.50

Economic Calendar

For a more complete Economic Calendar see: https://mrtopstep.com/economic-calendar/

Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.

Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!