1/12/2023

Wait is Finally over !

Traders-

I had shared a key level 3940 in the night yesterday (click here) and a few minutes before the open I had mentioned in the chat room below how I saw bullish action above 3940 level to target 3950.

This was a good level as it carved out a low for the session today, and we proceeded to rally about 50 handles higher almost into 4000.

Not only was this Emini level quite accurate, I had also shared TSLA 126 level at pre market open around 120-121. We bid up to 125.95 and that carved out the high for TSLA for this session, a few cents below 126.

Chart A Emini

Chart A above shows a low volume push into 4000 area.

If you have not already, make sure you join my chat room below for important updates when ever I share them during the course of the week.

Before I share my thoughts on the CPI tomorrow, I do want to summarize where I think we are in the longer term auction.

1. I had turned bullish near 3500 last year in the Fall and I had expected that we could trade 4150-4200.

2. I saw resistance come in at 4150 which was indeed the case before we sold down into 3800.

3. In middle of December, I posted how I do not see much selling pressure at 3800, unless we first tested 4000-4050 and we have started nibbling at those 4000 prints today, a day before the CPI.

4. The action today comes close to culminating after a 200 dollar move what I have been sharing for past 4 weeks or so - as long as 3800 support held, the line of least resistance remained up.

My thoughts for tomorrow

Long time readers know I do not like to issue a super formal plan for the CPI/FOMC etc , however I do share a few thoughts. Since the news comes out an hour before the open, it should set the stage for rest of the session at open:

1. I think for this bullish run to continue above 4000-4050 next, we need to see the CPI come in below the estimates which are consensus believed to be around 6.5%. So I think any thing below 6.5% could be extremely positive for the risk on names.

2. Dollar is now below the low of the range for me personally where I like to see it and I think further excursions lower may not be without some fight.

3. The edge case for the bears is if they get the CPI above 6.9-7%. I think this will also not happen as far as I can tell. This will probably be quite nasty for the risk on.

4. I am myself preferring a scenario where the CPI comes neither too low, neither too high, may be around 6.7-6.8 area. This will show that while what the FED has done is working they got much more work to do.

5. I think if this does come out to be around 6.7% this could be net bearish for the stocks even as knee jerk reaction and we could trade down into 3880-3900 area.

6. We last traded around 4000.

Let us say if this is indeed how it goes. I may share updates to this below in my chat room, so make sure you install the app and turn on the notifications from me! As always thanks for sharing the post to reach more traders like your self!

~ Tic Toc

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