The Fed and Tomorrow’s CPI Are In Focus

Watch for volatility

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Our View

It’s not just the clamor over the September 25 bps rate cut — now some are saying the Fed should do an emergency 50 bps rate cut.

There is a story out there that Wednesday’s CPI number is going to be a total disaster and show a big jump in inflation and that there will not be any rate cuts in 2024. After looking at how far the Fed is behind the 8-ball, I gave in to the idea of a September rate cut. But after the July jobs report I think the landscape has changed. 

Do I think the Fed will continue on its rate-cut path even if the CPI reports a jump in inflation? I do and what’s crazier is they probably will back it up with another rate cut before the end of the year. 

There are not many times that I can say this, but I can feel people are stressed out — the markets, Ukraine, the election and the Fed just to name a few. One thing we know for sure is Wednesday is going to see a big jump in volatility.

MiM and Daily Recap

The ES rallied up to 5389.50 on Globex and opened Monday’s regular session at 5381.00. After the open, the ES traded up to 5383.50, sold off to 5387.50, rallied to a lower high by 1 tick at 5383.50 at 9:37, and then sold off 36 points to 5347.75 at 10:00. 

After the low, the ES rallied 38.75 points to 5386.50 at 10:27, pulled back to 5378.75, rallied to a new high at 5391.25, and then sold off to 5383.25 at 10:46. It then rallied 13.5 points to the high of the day at 5396.75 at 11:05. The ES was then hit by three large sell programs that pushed it down 39.5 points to 5357.25 at 11:26. After this drop, the ES rallied back up to a lower high at 5390.25, sold off to 5376.25 at 12:17, rallied to 5383.50, pulled back to 5374.75 at 12:36, rallied to another lower high at 5384.50, and then dropped 25 points to 5359.50. It rallied to another lower high at 5381.25, sold off to 5367.00, made another lower high at 5377.50 at 1:36, and then dropped 21 points to a new low of 5356.25 at 1:53. The ES then rallied to 5370.75, pulled back to 5362.75 at 2:42, rallied to 5371.25 at 2:58, sold off to 5362.50 at 3:20, and then rallied to 5369.25 before selling off to 5358.00 at 3:48. 

The ES traded 5360.25 as the 3:50 cash imbalance showed $1.9 billion to sell, sold off to 5356.25, and then rallied to 5370.50 at 3:59, trading 5372.25 at the 4:00 cash close. After 4:00, the ES traded up to 5374.00, then stutter-stepped down to 5367.50, and settled at 5368.00, up 3 points or +0.06%. The NQ settled at 18,627.75, up 26.25 points or +0.14%. The YM settled at 39,488.00, down 152 points or -0.38%. The RTY settled at 2,071.30, down 18.60 points or -0.89%. Gold (GCZ4) settled at 2,513.40, up 40.00 or +1.62%.

In the end it was chop-city. In terms of the ES’s overall tone, it seemed like there was selling pressure on both the ES and NQ. In terms of the ES’s overall trade, volume was low at 1.166 million contracts traded.

Technical Edge

Guest Post — Tradrr

Heavy inflationary news week out of the US as well from Germany, UK, China and Japan. Starting the week traversing across the large POC node of the previous week and ending the current week’s profile POC near the highs opens up territory for managing momentum through 113’s towards the 114’s for the Ten Year Note futures. 

This becomes an important correlation to track as it has started positively correlated with equities can lead to monitoring reactions with established HVN points of the composite profile as an aid alongside the released reports coming out every day this week.

To learn more about Tradrr, please visit them here.

Economic Calendar

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Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.

Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!