Weekly Plan 3/5
Decision time
Hello traders,
Last week was an exceptional Remontada by the bulls not unlike the Barcelona-PSG game.
We had predicted it last Sunday that the bears are not out of the woods just yet
We were able to flip bias and went long at 3928.5 average.
It is important to know when we will see lows in globex versus RTH and maybe sacrifice on some sleep (not everyday, that is horrid for health).
Moving on,
This week we have three main catalysts.
1) Powell Testimony: I was hanging out with my 17 year old cousin yesterday and asked him what he thought about the Powell testimony and this was his response.
”Powell is about to spill some tea on the Fed’s cash flow to the Senate squad on Tuesday and the House squad on Wednesday.
He’s gonna get roasted for saying “we’re just warming up with disinflation” when everything else shows that prices are rising like mad.
Since he said that after the Fed’s last rate call on Feb. 1, the odds of a huge rate hike in March have soared to 27%, while the chance of a rate over 5.5% have rocketed to around 49%, according to some geeks at CME Group.
Before that, nobody was putting any money on anything.
“The Fed gets that high inflation blows big time, especially for those who can’t pay for the essentials,” the central bank said in its March cash report.
“The job market is mega tight, with jobs growing by 380,000 per month since mid-last year and unemployment being mega low.”
I agree with most things my cousin said but he is unaware of market breadth and bullish momentum in the internals. It would be a tough pill to swallow if I’m long and he is right on his bearish views.
2) NFP:
I got myself a nice haircut yesterday and spoke with my barber Jamal about NFP numbers on Friday and his take on it. (Yes, it is totally normal to talk about NFP with your barber)
”They say US jobs will grow less in February, eh? Only 200k, after they grew a lot in January, 517k. That’s bare cappin’. Maybe January was too good because of some adjustments, and February will take a L. The average jobs growth for the last 3, 6 and 12 months was higher than that. The unemployment rate will go up a little bit to 3.5%; the Fed thinks it will go up more to 4.6% in 2023, but they will chat about it again in March. Credit Suisse says maybe unemployment will not change this month, because they see many job openings and people saying it’s easy to find work. But with high inflation, people want more money for their work, so we have to look at the average hourly earnings; they say it will go up by 0.3% like last month, but people will work less hours, 34.6 instead of 34.7. That’s cheese fam. CS says the yearly earnings growth will go up to 4.7% from 4.4% because of a low comparison, but they also say that wage growth is slowing down in other ways. But still too fast for the Fed eh.”
3) China CPI: I asked my friend Cim Jramer to provide insights on to the Chinese CPI.
”Hey, listen up! It's time for some economic updates, and I'm fired up! In February, we can expect CPI Y/Y to rise slightly to 2.2% from the prior month's 2.1%. Now, that's what I'm talking about! And even though the M/M index is seen at 0.7% (prev. 0.8%), and Y/Y PPI is forecast at -0.5% from -0.8%, we're still seeing some positive gains. The release notes that using the Caixin PMI as a proxy, prices have remained stable with some marginal gains in input costs and prices charged in the services sector under mild inflationary pressure. Service providers reported experiencing elevated costs of raw materials, labor, and office supplies to some extent. But we're not going to let that bring us down! On the other hand, China's "two-sessions" will begin on Saturday, and according to Reuters sources, China is set to stick to its long-standing inflation target of around 3%. Monetary policy is expected to ease further in the coming months to counter deflation pressure as well as the yuan appreciation. So let's turn that frown upside down and get pumped! We're going to crush it this year, and nothing is going to stop us!”
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Levels for this week.
These are my levels for major indices and commodities for the coming week.
GC:
Gold has been on an absolute tear since our call to long it at 1814 and 1831.
Those in GC long can target trims at 1870 and 1894(optimistic).
If GC hits 1925, that would likely signify the end of the move for now.
Levels for GC:
Primary directional inflection point: 1855.40
For Bulls: 1870.8, 1894.3, 1925(unlikely)
For Bears: 1846 and our old levels of 1831 and 1814.
ES:
Note: These are weekly levels and updated daily levels will be sent in telegram.