Daily Plan 4.9.24
Hey traders-
Primary expectation was to see selling pressure as long as we remained below 5280 from the weekly plan.
We could barely take out 5270 on the upside and then sold down to around 5240s shortly thereafter. This level remained resistance throughout the cash session as well as the Globex session.
There is not any major DXY, SPX impacting news until Wednesday when the CPI comes out. Until then, unless we take out 5280 on the upside, we could see some softness headed into the CPI.
With CPI data, I maintain my view that we will see a 0.3% or so monthly rate of increase and to get in line with 2% FED goal, we need to see less than 0.2% monthly gain. If we get a 0.2% this could be quite bullish but I think it won’t be.
Generally, for an educational view, there are 3 main types of inflation- Goods + services (CPI), asset price inflation and wage inflation.
The FED by its intent and tools can control and only cares to control the goods + services inflation. It does so by hindering demand for these via its capability to control money creation thru lending. Imagine higher the rates, lower the lending activity.
What the FED does not care at all about is the asset inflation, and by its actions on liquidity, the FED does intend to lower the wage growth thereby fueling the asset price bubbles and at the same time keeping the average working class poorer.
However, at this point in time, it has lost its grip on the services side of the equation and the largesse of the Fiscal side means the prices of basics like oil are close to hitting new highs again. This is why you have sort of bipolar statements and actions by this FED, as well as market participants when it comes to rate cuts. The year started off with 4 cuts. Yet here we are now with only 2 cuts. In other words, this FED is trapped and this is why we are seeing new highs in Gold and Silver almost every day. Gold usually rises in times of economic uncertainty and stress. Then you have weakness in leading leaders like those in SOX type names. If I were to take a guess I think we get one rate cut in June, and then no rate cuts for rest of the year.
If you are a brand new bull in these markets, this should be a little discomforting. If you are a bear on risk on assets, this makes you feel good. Eventually auction will go where it has to go, we only have price action to measure it. The price action had 5250 as a major breakout point only a couple weeks ago. And this has now been lost within 2 weeks. This is why the bulls have to take back this whole 5250-5270 zone again via a couple of daily closes, and better yet a weekly close above this range.
BMA
BMA is active in Argentinian markets providing a variety of financial services. I like this action in BMA at 50 and I think as long as this levels around 47-50 holds, we could see it push higher into 70+.
VALE
With VALE, purely a technical point of view. This 10-12 dollar level has been a tremendous support in past. If this holds, I think we are headed higher into 16-17 level. It is 12 now.
Key level for tomorrow
My key levels for tomorrow will be 5230 and 5256. At time of this post we are last trading 5256.
Scenario 1: If we open the cash session around 5230 and remain below 5230, I expect more softness in the session to target recent lows around 5206-5211.
Scenario 2: If we open and remain above 5256, I think we can retest some of the highs from today near 5270.
Scenario 3: If we open above 5256 but do not hold it, I think we could drop into 5240 and find support there for a move back into 5256.
~ tic
Disclaimer: This newsletter is not trading or investment advice but for general informational purposes only. This newsletter represents my personal opinions which I am sharing publicly as my personal blog. Futures, stocks, and bonds trading of any kind involves a lot of risk. No guarantee of any profit whatsoever is made. In fact, you may lose everything you have. So be very careful. I guarantee no profit whatsoever, You assume the entire cost and risk of any trading or investing activities you choose to undertake. You are solely responsible for making your own investment decisions. Owners/authors of this newsletter, its representatives, its principals, its moderators, and its members, are NOT registered as securities broker-dealers or investment advisors either with the U.S. Securities and Exchange Commission, CFTC, or with any other securities/regulatory authority. Consult with a registered investment advisor, broker-dealer, and/or financial advisor. By reading and using this newsletter or any of my publications, you are agreeing to these terms. Any screenshots used here are courtesy of Ninja Trader, FinViz, Think or Swim, and/or Jigsaw. I am just an end user with no affiliations with them. Information and quotes shared in this blog can be 100% wrong. Markets are risky and can go to 0 at any time. Furthermore, you will not share or copy any content in this blog as it is the authors’ IP. By reading this blog, you accept these terms of conditions and acknowledge I am sharing this blog as my personal trading journal, nothing more.