Engaging the core (CPI)
Inflation is the focus for Wall Street and the global markets, with only an extremely tame rise in consumer prices likely to give Fed members cause to rethink rate trajectory. Core CPI is expected to revisit the peak it saw back when the Fed started its tightening cycle with what now looks like an almost quaint quarter-point hike. Now fed funds futures are pricing in an 80% chance of another 75-basis-point rise in November to bring rates up to 3.75%-4%.
A hot CPI report on the heels of a strong gain in September payrolls would cement the hawkish Fed path through to the decision early next month. For the numbers, economists expect headline CPI to rise 8.1% Y/Y in September, easing from the 8.3% pace in August. Meanwhile, core CPI, which strips out volatile food and energy prices, is expected to climb 6.5% Y/Y, faster than the 6.3% increase in the prior month. That would match the peak seen in March.
Markets
Economic Calendar
8:30 Consumer Price Index
8:30 Initial Jobless Claims
2:00 PM Treasury Statement
4:30 PM Fed Balance Sheet
***New: PTG Trading Room Chat Log’s Link
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
Saudi Arabia pushed back strongly against U.S. warnings of ‘consequences’ for its decision to cut oil output from next month, saying that the OPEC+ decision had been taken purely with regard to balancing the global market.
U.S. crude futures were bumping along near one-week lows, down 0.1% on the day at $87.20 a barrel, while Brent crude was flat at $92.00 a barrel. The U.S. government releases weekly inventory data at 11:00 ET.
S&P 500
Prior Session was Cycle Day 2 (CD2): Normal CD2 as price oscillated in “choppy-trade” between 3585 – 3635 TargetMaster range boundaries as traders await today’s key CPI print. Range was 49.75 handles on 1.900M contracts exchanged.
…Transition from Cycle Day 2 to Cycle Day 3
This leads us into Cycle Day 3 (CD3): Price is currently above CD1 Low (3579) and bulls will need to keep price above during RTH for positive 3 Day Cycle. Expectation is for continued elevated volatility post CPI print @ 8:30 am. As such, estimated scenarios to consider for today’s trading.
Bull Scenario: Price sustains bid above 3600, initially targets 3525 – 3535 zone.
Bear Scenario: Price sustains offer below 3600, initially targets 3585 – 3575 zone.
PVA High Edge = 3613 PVA Low Edge = 3598 Prior POC = 3608
Range Projections and Key Levels (ES) December 2022 (Z) Contract
HOD ATR Range Projection: 3688; LOD ATR Range Projection: 3530; 3 Day Central Pivot: 3617; 3 Day Cycle Target: 3675; 10 Day Average True Range 96; VIX: 33
Nasdaq 100 (NQ)
Today is Cycle Day 3 (CD3)…Price is above CD1 Low (10767.25) with 3 Day Cycle appears secure to start today’s CPI session. Expectation is for elevated volatility with wide array of price swings. As such, estimated scenarios to consider for today’s trading.
Bull Scenario: IF Bulls sustains bid above 10850, THEN initial upside estimate targets 10932 – 10955 zone.
Bear Scenario: IF Bears sustains offer below 10850, THEN initial downside estimate targets 10786 – 10767 zone.
PVA High Edge = 10904 PVA Low Edge = 10842 Prior POC = 10878
Range Projections and Key Levels (NQ) December 2022 (Z) Contract
HOD ATR Range Projection: 11171; LOD ATR Range Projection: 10648; 3 Day Central Pivot: 10925; 3 Day Cycle Target: 11505; 10 Day Average True Range: 346; VIX: 33
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!
Good Trading…David
“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
IMPORTANT NOTICE! No representation is being made that the use of this strategy or any system or trading methodology will generate profits. Past performance is not necessarily indicative of future results. There is substantial risk of loss associated with trading securities and options on equities. Only risk capital should be used to trade. Trading securities is not suitable for everyone.
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CFTC RULE 4.41 –HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN6.22.22