Market Ideas Into US CPI & Powell Update

Well, hello, gang! I hope everyone’s doing well, Z here from Become A Better Trader. A little market update for you. So, last time we spoke on videos we talked a little bit about what this week is to look like and where we could potentially see the week going. We had a break out on Friday there’s Friday’s candle on the ES on the strong jobs data we also got some strong consumer credit data, in fact, we got some really strong consumer sales data on Monday last week but, unfortunately, on that Monday after the Thanksgiving weekend looks like folks may have had a little too much turkey in their belly and we broke a dam of support at around 3140 and we then saw negative trade data, trade headlines, Trump saying that maybe the deal happens after election. We made lows and since that point in time we’ve been in a bounce – Monday’s market move was a bit of a whimper. W weak form risk-off we didn’t see anything that was very statistically significant. Some jitters on trade overnight were met with a headline this morning that picked sentiment up so, if we look inside the day we could see that market dropping off overnight and that happened around the 325 to 340 AM marker. We broke below a key support structure that line was 3132 in about a half a point built in inverted Head & Shoulders pattern and as we approached that 8:25 – 8:30 a.m. marker we got another headline that suggested the US and China may not have to go through with those tariffs on Sunday, December the 15th and up, up and away we went. It was a very, very big move from 830 lending itself to a bull flag that didn’t really build on itself and we ended up coming down testing the neckline of this inverted Head & Shoulders pad and that test happened right there at 9:35 and at that precise moment in time we started to see indicators telling us that a turn is more likely. So, in the Active Trader Room we saw this bounce opportunity play out and it took us back up to a double top formation. The rest of the day was no real strength building. It was as if the market used up all of its fuel on the first two moves of the day and we kind of flagged down. As we moved into the close we came down and retested that level of support again and bounced up in the Active Trader Room most of the active traders were looking at the market more likely tilting up into the close and shortly after hours and looks like the group got it right now what’s next tomorrow morning we get the U.S. CPI the Consumer Price Index data. Our Econometrica modeling supports it coming in a little warmer. That could create some jitters. Where would the jitters more likely be felt?

Well, we more likely see the US dollar gets stronger on a warmer CPI print but we’re not expecting that to change policy. We know that Powell speaking at 2:00 p.m. Eastern to our 2:30 p.m. Eastern time tomorrow, for example, the MC policy statement and he could easily reaffirm that he was right. Took the right number of rate cuts and wait-and-see mode, not gonna offer the market any more candy, bottom line is the CPI data tomorrow morning is not really even if it comes in hotter or warmer it’s not likely gonna affect policy. It could create some jitters tomorrow morning though. So, one of those jitters could be seen in the Euro. The euro USD coming down a little bit if that does indeed play out at 8:30 a.m. Eastern Time when the data breaks we could very easily see a little bit of a shine on gold and silver come down a little bit and that effectively could create a little bit of negative action on equities in North America. Now, does that mean the market rolls over? That’s not still the likely outcome it would require Powell to spook the market. Now, Powell’s got a fairly good track record of opening his mouth and markets going down. However, the last time where he made a call – end of October now to where we are right now he’s been right. They didn’t need to do more they’ve got the right amount of rate setting however underneath all of that with the repo market crisis we’ve seen them pumping money into the market over and over. So, tomorrow morning the outlook that we have is more likely a market that has a little bit of jitters. CPI comes in warmer. Powell could come in and do the opposite of what he normally does tomorrow and actually create risk on and then he transfers that baton towards Lagarde at the ECB on Thursday morning. Now, in the weekend video you may have heard me talk about certain sectors that have catch-up potential and certain sectors that were overextended. For swing traders that were looking at long side trading the technology sector had catch-up potential.

So far, it’s been very indecisive. We haven’t really seen it take over the highs that presented on Friday. We have a slight blip above there but we didn’t actually see a higher high that was sustainable. We have not seen the consumer discretionary sector really rev if you will. It’s been a bit of a whimper over the last couple of days and folks are gonna be waiting to hear from Powell and Lagarde to elect direction overall but what we did see is some of the spaces that have overextended already on Friday’s breakout move. The banks in particular, the healthcare space, well, they held up but they’re not getting any brighter at this moment in time. Tomorrow morning the expectation is for a little bit of jitters. Those jitters can likely be mopped up by Powell in the afternoon and what we’re looking for tomorrow afternoon is a risk on reversal where US markets passed the baton into eurozone markets where in the eurozone we see Lagarde come out and have an easier job of convincing the world that she could spend taxpayer money create a banking union and we get some upside opportunities in the FEZ ETF of the EU FN ETF those are the areas that I’m focused on is mentioned in the prior videos the areas that I would be looking for swing trading longs from my personal swing trading EU FN long F easy long are things that I’m considering in to Christine Lagarde on Thursday morning. The triggers haven’t been hit for me as of yet so I’m in wait-and-see mode on those areas. Now, if tomorrow morning we get the U.S. CPI data coming in cooler – after today’s indecision print where we got a scare we got a headlight to overturn that if this market is able to come up tomorrow and give us enough time tomorrow above 3147 that would be a bullish sign in general implying at minimum a retest of the all-time intraday highs made on December the 2nd if not slightly higher. If we get a warmer or hotter CPI print – pretty hamstrung for a good chunk of the day waiting for Powell to pick up the slack and actually give us a push up and again in our Active Trader Room community has looked at this being the shape of the week – scenario B. So, the the group is still looking at that as the outcome but we need the signal tomorrow to actually look to elect that direction for us. I hope that this has given you some insight on market levels and some of the events coming up this week and builds on the weekend video. We’ll see on the next nightly video have a wonderful rest of your day! Bye for now.

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Hey gang, filling in for Rob, he lost his voice. It's Z here. Let's take a quick look at markets...