how we're trading the HOT inflation read 🥵
Afternoon team.
We’re back with another breakdown of what we’re watching.
Did the markets get a reality check after today’s CPI report?
Let’s find out 👇
Impact Snapshot
US core CPI rises most in eight months as inflation persists
Market Evaluation
Stocks dropped across the board after hotter than expected inflation data for January spiked Treasury yields and raised doubts that the Federal Reserve would be able to cut rates several times this year.
In January, the CPI annual inflation rose to 3.1%, exceeding the expected 2.9%.
Although the inflation rate is decreasing, it remains uncertain if it will reach the Federal Reserve's 2% target anytime soon.
Core prices are resilient, indicating that considering easing monetary policy in March or June may be premature.
This was nothing but a reality check on a market that had priced in a perfect 2024 outlook which was one of the key parts of the bull case for the equity market.
Ultimate TradingView Suite
A beautiful setup we shared this Monday. We were looking at this upside continuation if the market was to maintain activity on Friday’s upper distribution area that we shared Here.
We can see how buyers took control of the market to push the prices towards our identified pivot of 5067 and using our TradingView suite to look at the volume profiles to add context and our indicator toolkit we were able to secure a nice R:R trade.
Markets Breakdown
Early this morning in our market report we shared a key statement.
The true consequences of that statement followed up in the overnight session as the market tanked over 1.4% to open the US session after an unexpected CPI outcome.
When liquidations like these are in play due to emotional sentiment reports, it's like everyone is trying to get out from the same door at the same time.
As we can see in the showcased chart bellow, market had a clear rejection of higher prices as we’ve highlighted in today’s market report here.
That put us back into a prior key balance area. High volume nodes attract prices like magnets.
Entering a prior balance area and finding acceptance inside can see rotation towards the other end of balance.
ES
The targets we look for until NY close & Targets to pay attention Tomorrow:
Upside Levels: 5005/5016/5042
Downside Levels: 4957/4930/4909
That’s all we got!
We’ll see you on Thursday.
Cheers.
Disclaimer: Futures and options trading carries a significant level of risk and may lead to substantial financial losses. The content provided in this newsletter is solely for informational purposes and should not be construed as a trade recommendation or financial advice. It is essential for readers to independently assess and make their own investment decisions, taking into consideration their personal financial situation and risk tolerance.