Weekly Plan 6/9
Inflation and cuts, a love story
Hello traders,
Hope you had a great weekend.
Last week, we had another excellent week here at the substack.
Recap of last week’s ideas.
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Moving on,
Market Recap and Outlook
Last week delivered a mix of economic data that was just right for the markets — not too hot, not too cold — until a hotter-than-expected Non-Farm Payroll (NFP) report triggered a rapid correction across most indices. Interestingly, the NASDAQ managed to buck this trend, still riding high on the semiconductor boom.
The recent upward movement in the market has been heavily concentrated in a few leading stocks, leaving the broader market looking for a moment to catch its breath. This week promises to be pivotal with the Consumer Price Index (CPI) data and the Federal Open Market Committee (FOMC) meeting on the docket.
The Fed's Focus: Growth Over Inflation
It's becoming increasingly clear that the Federal Reserve has shifted its focus away from the strict 2% inflation target. Instead, the Fed seems more inclined to foster growth and support a broad market rally, even if it means tolerating higher inflation levels. This shift in policy stance suggests that the upcoming CPI numbers might not have as significant an impact on market direction as they once would have.
Key Levels to Watch
For the S&P 500 (ES), the crucial level to watch is 5246. If the bulls can defend this price, we could see a continuation of the march towards new all-time highs throughout the remainder of the month. For the NASDAQ (NQ), the key level is 18655. A strong defense of these levels by the bulls would likely set the stage for further gains.
However, if these levels fail to hold, we could see a deeper pullback with the S&P 500 potentially dropping to 5140 and the NASDAQ to 17900. These are not short-term levels but rather significant support zones that could come into play if market sentiment sours.
Game Plan
For the S&P 500 (ES): A strong hold above 5246 will be a good spot to add to long positions, targeting new highs. However, a break below this level would necessitate a reassessment, with 5140 as the next line of defense.
For the NASDAQ (NQ): A defense of 18655 would confirm the bullish trend, making it a good entry point for longs. If this level fails, the next support at 17900 will be critical to watch.
Weekly levels until CPI day: