U.S. inflation will likely accelerate in coming years and move toward the Federal Reserve’s 2% target, Richmond Fed President Jeffrey Lacker said during a speech at the Banque de France in Paris. “Inflation has been held down recently by two factors, the falling price of oil and the rising value of the dollar…after the price of oil bottoms out, I would expect to see headline inflation move significantly higher.” Lacker, who doesn’t vote on monetary policy this year, dissented in September and October in favor of an earlier liftoff of interest rates from zero – a move finally made by the Fed in December.
In Asia, Japan closed. Hong Kong flat at 20684. China +2.2% to 3019. India +1.3% to 25285.
In Europe, at midday, London +0.2%. Paris flat. Frankfurt +0.9%.
Futures at 6:20, Dow +0.2%. S&P +0.1%. Nasdaq +0.2%. Crude -0.3% to $41.02. Gold -0.7% to $1245.10.
Ten-year Treasury Yield flat at 1.88%
(Source: Seeking Alpha)
2:45 Fed’s Lacker: Central bankers outlook
8:30 Chicago Fed National Activity Index
10:00 Existing Home Sales
12:30 PM Fed’s Lockhart speech
8:30 PM Fed’s Bullard: Economic Outlook
Friday’s prior session began a new Cycle with a “shallow low” (less than normal), which reinforces the bullish sentiment of this recent upswing. Quad Options Expiration along with Rebalance made for a tough low volatility trade session.
Today is Cycle Day 2 (CD2)…NORMAL NEUTRAL UP…There remains plenty of upside potential should price hold above CD1 High (2042.75)…First Sign of Weakness (SOW) would be a violation and conversion of 2027.00 (CD1 Low).
Range Projections and Key Levels: June (M) Contract
HOD Range Projection = 2052.33; LOD Range Projection = 2022.92; CD2 Maximum Penetration Level = 2056.64; CD2 Maximum Violation Level = 2011.55; Cycle Day 1 Low = 2027.00; 3 Day Central Pivot = 2024.50; 3 Day Cycle Target = 2062.28; 10 Day Average True Range = 21.33.
**Note: The odds highlighted are NOT predictions or trade recommendations, rather a guide based upon historical observed occurrences.
Today’s Hypotheses: June (M) Contract
*****The levels outlined below are more general framework within a larger range…They are to be used are reference prices from which to consider trade opportunities, not hard trade levels.
Scenario 1: IF price clears and converts PH (2042.75), THEN upside expansion targets 2044.25 – 2046.00 STATX Zone…Above this zone measures 2052.33 (HOD) and 2053.64 CD2 Max Penetration Level.
Scenario 2: IF price violates the ONL (2031.00), THEN test of CD1 Low (2027.00) would likely unfold. Further violation and conversion of this level opens door to deeper corrective move targeting 2024.50 3 Day Central Pivot, then 2022.92 Low of Day projection.
Trade Strategy: Our tactical trade strategy will simply remain unaltered…We’ll be flexible to trade both long and short side from Decision Pivot Levels. Continue to focus on Bull/Bear Stackers and Premium/Discounts. As always, remaining in alignment with dominant intra-day force increases probabilities of producing winning trades.
Stay Focused…Non-Biased…Disciplined ALWAYS USE STOPS!
“Knowing is not enough, We must APPLY. Willing is not enough, We must DO.” –Bruce Lee
*****This trade strategy report is disseminated for “education only” and should not be viewed in any way as a recommendation to buy or sell futures products.”
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS