From Inflation Figures to a Potential Bull Trap
Hello everybody! Today we will get the release of the inflation numbers, so I would like to give you a solid update!
First of all, we are observing a gradual shift from bearish to bullish attitudes, particularly as the SPX is reaching the 4350-4400 mark, a target I previously highlighted multiple times on both Tradingview and Twitter. However, we must remain aware that the market could further extend up to 4450-4500 before peaking. For SPX the 4350-4400 zone was a key breakdown zone that was never retested, an FVG was formed which has now been filled. The NDX actually had some major gaps in this area, that have also been filled. The SPX is on the brink of becoming severely overbought at this juncture, while the NDX is clearly extremely overbought on the weekly timeframe. Whenever the Nasdaq 100 has gotten this overbought over the last few years, we have seen significant corrections follow. Also testing or going above the weekly and monthly R3 Fibonacci pivots is a sign that the market is at resistance and getting oversold on shorter timeframes too.
The Russell 3000 is close to hitting a key resistance level, which is just a mere 2% away. While these indices could be close to a top, others, like CN50, DAX, Nikkei, and Russell 2000, indicate more upside.
So, what's my projection for the near future? I foresee a final upward movement in stocks in the next two days. The reason for this prediction is the possibility of inflation coming in below expectations and a potential pause from the Fed without an interest hike. These circumstances could lead to a 2-3% market rally before a final short squeeze or bull trap. Even though the present market movement appears sustainable, with the rally seeming robust despite the market potentially being overbought and hitting key levels, I believe it may be time to consider taking profits, especially if we witness a significant move higher in the next 1-2 days.
Inflation numbers are scheduled to be released today (or tomorrow), with expectations hovering around 4.1%. However, I expect the figure to be between 3.9-4%, as inflation is on a declining trend. This decline in inflation, coupled with a slowing housing market and rising recession probabilities, could have profound implications for the market. We've observed oil, wheat, and palladium prices dropping while copper remains flat or slightly down on the commodities front. I speculate that this might be the onset of deflation, possibly heralding the final disinflationary pressures.
First of all, we are observing a gradual shift from bearish to bullish attitudes, particularly as the SPX is reaching the 4350-4400 mark, a target I previously highlighted multiple times on both Tradingview and Twitter. However, we must remain aware that the market could further extend up to 4450-4500 before peaking. For SPX the 4350-4400 zone was a key breakdown zone that was never retested, an FVG was formed which has now been filled. The NDX actually had some major gaps in this area, that have also been filled. The SPX is on the brink of becoming severely overbought at this juncture, while the NDX is clearly extremely overbought on the weekly timeframe. Whenever the Nasdaq 100 has gotten this overbought over the last few years, we have seen significant corrections follow. Also testing or going above the weekly and monthly R3 Fibonacci pivots is a sign that the market is at resistance and getting oversold on shorter timeframes too.
The Russell 3000 is close to hitting a key resistance level, which is just a mere 2% away. While these indices could be close to a top, others, like CN50, DAX, Nikkei, and Russell 2000, indicate more upside.
So, what's my projection for the near future? I foresee a final upward movement in stocks in the next two days. The reason for this prediction is the possibility of inflation coming in below expectations and a potential pause from the Fed without an interest hike. These circumstances could lead to a 2-3% market rally before a final short squeeze or bull trap. Even though the present market movement appears sustainable, with the rally seeming robust despite the market potentially being overbought and hitting key levels, I believe it may be time to consider taking profits, especially if we witness a significant move higher in the next 1-2 days.
Inflation numbers are scheduled to be released today (or tomorrow), with expectations hovering around 4.1%. However, I expect the figure to be between 3.9-4%, as inflation is on a declining trend. This decline in inflation, coupled with a slowing housing market and rising recession probabilities, could have profound implications for the market. We've observed oil, wheat, and palladium prices dropping while copper remains flat or slightly down on the commodities front. I speculate that this might be the onset of deflation, possibly heralding the final disinflationary pressures.
تعليق:
Before, I thought the ratio of NDX and RUT (Tech vs small caps) would go up and then down, but it went down first and now going up. This ratio could explode a lot higher. I believe Tech will dominate. This ratio could increase as everything has a correction and then increase as Big Tech keeps outperforming. I do think that based on some data I see, US big tech could go up another 20% to 100% from here.
تعليق:
The trade isn't fully active yet, but someone could enter a short soon. Below I have some potential trades on the NDX, SPX, and RUA:
تم فتح الصفقة:
The trade is on. After being long, we have flipped short. Stop to break even. A new high above 4450 on the SPX would indicate that the market wants to go higher. I'd rather be safe than sorry in that case.
As expected, inflation came below expectations for the second time in a row, the Fed paused, and overall inflation seems to keep going lower and lower. I believe it will be sub-3 % in the next print.