how we're trading the volatility ahead
Hey team!
With Wall Street now gearing up for Friday’s key inflation data let’s recap past few days and see what we’ll be looking moving forward.
Let’s jump in!
Impact Snapshot
Economy slows and inflation jumps, damping soft-landing bets
Tomorrow: PCE Inflation & Consumer Sentiment.
Afterhour Earnings Today: MSFT 0.00%↑ GOOGL 0.00%↑ INTC 0.00%↑
Market Evaluation
U.S. economic data showed a sharp slowdown in growth and pointed to persistent inflation.
In addition to the sluggish growth rate observed for the quarter, the report indicated that consumer prices surged at a rate of 3.4%, significantly surpassing the 1.8% uptick recorded in the previous quarter.
This raised concern over persistent inflation and put into question whether the Federal Reserve will be able to cut rates anytime soon.
Combining both datasets, it appears that a stagflationary scenario is likely, presenting an additional challenge for policymakers moving forward.
Traders were initially shaken up by data that showed exactly what they did not want to hear: a significant slowdown in the world’s largest economy and persistent inflation pressures.
Markets Breakdown
Tuesday’s session was characterized by short covering with yesterday being a balance day which was anticipating today’s key economical releases.
As we’ve shared with our follows on X yesterday, when the market is being too short, it can actually provide some temporary support. How do you cover a short? You have to buy.
Short-covering which played another key factor in today’s session, helped market rebound and put us back into yesterday’s 2-day balance range.
Aggressive selling between the Overnight hours and the US session are two different things.
The volume that occurs overnight is often no more than 25 percent of the volume experienced during the pit session hours.
Generally, overnight trade involves shorter timeframe, weaker-hands traders. If inventory gets too long or too short, the odds are good that there will be an inventory adjustment shortly after the pit session opening.
After the bearish scenario was hit with our final downside pivot at 5025 on today’s market report we’ve shared on X, early in the overnight and prior to the GDP release, our update was focusing for rotations to the upside.
ES
The targets we look for until NY close & Targets to pay attention Tomorrow:
Upside Levels: 5112/5134/5154
Downside Levels: 5051/5035/5009
That’s all we got!
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We’ll see you again on Sunday.
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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.