Weekly Plan 5/12
Will Powell Blink?
Hello traders,
I hope you had a wonderful weekend. Wishing a Happy Mother's Day to all the incredible mothers who read this newsletter.
Last week was a slow week and we were able to capture some of the points on offer.
Here is a small recap of the week gone by.
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Moving on,
This week we are looking at the all important CPI print and apparently BLS removed coffee from the CPI calculation and it caused a bit of a furore on twitter.
But if you look closely, it is the canned coffee that has been removed and other types of coffees stay in the basket.
So back to the point, not everything is a conspiracy theory to lower the CPI print.
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The upcoming week is crucial for the Fed. We've seen three months of rising inflation, and if this continues, it will be the fourth. This, along with weak economic data, hints at stagflation. Powell will speak on Tuesday, likely repeating his recent points: needing more inflation evidence before rate cuts, the economy's strength, and a data-driven approach.
Upcoming retail sales data will provide more consumer insights. Consumer sentiment dropped significantly last Friday, and jobless claims are at a eight-month high.
The Fed is at a critical point. So far, they've chosen growth over fighting inflation, but rising inflation may force a change in strategy.
Okay Algo enough Macro and dunking on engagement baiting twitter accounts, what does this mean for the markets?
Sure, For ES we are looking at 5276 and 5303 to the upside and for NQ 18603s and 18768s for upward thrusts. More levels are at the end of the newsletter.
Side note:
As a daytrader(and not a macroeconomist) I can only say that post CPI we could see a spike in the volatility for a couple weeks and then again slowly go into the humdrum of the summer low VIX market. Honestly, this is where I urge most of my full time trader friends to take a vacation and rest and recharge.
When I take a vacation, I will pause subscriptions so no one will be charged for the duration of my vacation.
Levels for the week until CPI: