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- (Free) CPI Data Is On Tap
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Dear readers, our friend Rich Miller (AKA @Handelstats) will be hosting a premarket webinar this Thursday at 9:00 am ET, after the PPI number. Topics will include chart price levels, opening gap probabilities, range statistics and potential option trade strategies.
Our View
There is always a reason for the stock market selling off and yesterday it was the US government debt ceiling negotiations. Today's market-moving news will be the Consumer Price Index (CPI) and tomorrow’s will likely be the PPI report, then on Friday is the weekly options expiration.
As we all know, today's release is one of the most market-moving economic indicators and I believe that a good share of the weakness over the last two days is related to this morning's release. The big question is, will it be enough to break the current buy-the-dip mentality?
I highly doubt that, but it could provide both buyers and sellers some new trading opportunities.
“Our estimates suggest core inflation experienced a short-lived pick-up in April, with no further acceleration beyond. We forecast core CPI increased by 0.38% (vs. 0.3% consensus), matching the March pace, while strong energy prices should lift headline CPI inflation (0.46% vs. 0.4% consensus).”
Our Lean — Danny’s Trading Plan for CPI
This is Danny Riley’s personal trading plan for the day.
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MiM and Daily Recap
The ES traded down 4134 on Globex and opened Monday’s regular session at 4135.50. From there, it sold down to 4131 and took out the Globex low, popped up 4143 at 10:00, pulled back to a higher low of 4133 at 10:10, then rallied to a lower high of 4142 at 11:15. The ES fell into a “lazy” trading range, slowly pulling back to the 4133 area around noon and trading in a tight range for almost an hour.
Just after 1:45, it traded 4136.50 then popped up to 4145.25, pulled back to 4143 at 2:45, then dropped to 4135 five minutes later. That’s when the ES entered a low-volume downtrend. It traded 4137.50 at 3:50 as the cash imbalance showed $123 million to buy, dropped to 4132.50, then traded 4134.50 at 4:00. The ES settled at 4135.25 on the 5:00 futures close, down 18 points or 0.45% on the day.
In the end, it was another low-volume snoozer ahead of today’s CPI print. In terms of the ES’s overall tone, neither side could gain momentum, although 4133 held as support most of the day. In terms of the ES’s overall trade, volume was painfully low at 966K contracts.
Technical Edge
NYSE Breadth: 45% Upside Volume
Advance/Decline: 39% Advance
VIX: ~$18
A couple of anemic sessions when it comes to volume. It seems like everyone’s waiting for the CPI number to decide what to do next. Hot numbers and traders will know the Fed is in a tough spot. Soft numbers and maybe the “Fed is done raising” chorus gains some momentum.
S&P 500 — ES
There are levels in between (of course) but if we get the typical wide-range CPI reaction, it’s good to know the outer edges of the recent range.
Pivot: 4163
Upside Levels: 4175-80, 4198-4206, 4242
Downside levels: 4100, 4075-80, 4063
SPY…
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Guest Post
Topic: PTG Taylor 3 Day Cycle
Prior Session was Cycle Day 1 (CD1): Normal Cycle Day 1 as price declined establishing a new low at 4131.00 on exceptionally narrow range and light volume, as traders await the all-important CPI print. Prior range was 22 handles on 965k contracts exchanged.
…Transition from Cycle Day 1 to Cycle Day 2
This leads us into Cycle Day 2 (CD2): Big event for today is the CPI Print @ 8:30. Market’s reaction should set the tone for the next directional move. As such, scenarios to consider for today’s trading.
Bull Scenario: Price sustains a bid above 4145, initially targets 4155 – 4160 zone.
Bear Scenario: Price sustains an offer below 4130, initially targets 4115 – 4110 zone.
PVA High Edge = 4140 PVA Low Edge = 4133 Prior POC = 4137
*****The 3 Day Cycle has a 91% probability of fulfilling Positive Cycle Statistics covering 12 years of recorded tracking history.
For more detailed information for both bullish and bearish projected targets, please visit: PTG 3 Day Cycle and/or reference the Cycle Spreadsheet below:
Link to access full Cycle Spreadsheet > > Cycle Day 2 (CD2)
Thanks for read
PTGDavid
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