Today’s CPI Print Will Drive the Action

But this week has plenty left in store.

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Our View

As you know, I have been writing about the high price of crude oil for several weeks. The reason is with rates so high and inflation raging, it could be a precursor to a stock market selloff.

After falling earlier in the year, crude oil caught a bid at the end of June and has gone up ever since. It’s up 9 of the last 11 weeks and is up another 2% so far this week. Brent crude traded north of $92 a barrel yesterday — its highest price since November — and then took out that high this morning.

While the oil companies are doing great, the higher prices of energy will weigh on the stock market. Over the last couple of weeks, the PitBull has said there is no way stocks can keep going up as oil rallies, that “he just doesn’t see it.” Meaning many of the top stocks he follows are not going up or participating.

Another scary tidbit, 80% of all US dollars in existence were printed in the last 22 months (from $4 trillion in January 2020 to $20 trillion in October 2021). Putin and Xi are licking their chops and what’s going on with Iran and Israel? Any reduction in the flow of oil will put more pain on the US consumer and risk sending the US economy into a tailspin.

I hate writing about this stuff, but I also don’t think we should be overlooking it either; it’s too front and center.

MiM and Daily Recap

The ES traded down to 4519.50 on Globex and opened Tuesday’s regular session at 4523.75. The ES traded 4521.75 and then rallied up to 4532.50, pulled back to the 4524.50 level at 10:11, and then dropped down to 4514.50 at 11:12. From there, it rallied up to 4529.50 at 1:09, traded down a few points to 4526.50 and then shot up 4539 at 1:25 after the iPhone event started and then dropped down to 4507.25 at 3:30 as the early imbalance showed $143 million to buy.

After the low, the ES traded up to 4512.25 and traded 4512.50 as the 3:50 cash imbalance showed $803 million to buy. The ES traded 4513.50 on the 4:00 cash close and settled at 4513.75 on the 5:00 futures close, down 25.75 points or 0.57%. The Nasdaq future settled at ? down 174 points or 1.1% on the day.

In the end, it was not an easy day for the markets, as the weakness in the Nasdaq overwhelmed the S&P. In terms of the ES’s overall tone, it was “follow the leader” — the NQ. In terms of the ES’s overall trade, volume minus the ESU/Z spread was low again. With the spread volume, we hit a total 1.85 million.

Don’t forget. The S&P, Russell and Nasdaq’s US indexes will rebalance on the close this Friday, September 15th. Changes were announced after the close for Russell 8/18 (prelim), 9/1 (final); S&P 9/1; S&P Select Sectors/Industries 9/8; and Nasdaq 9/8.

Technical Edge

Guest Post — PTG / Taylor 3 Day Cycle

Author: David D Dube’ (a.k.a. PTGDavid)

Website: https://polaristradinggroup.com/

Prior Session was Cycle Day 1 (CD1): Normal CD1 as price declined establishing a new cycle low at 4507.25. Prior range was 31 handles on 1.056M contracts exchanged.

 …Transition from Cycle Day 1 to Cycle Day 2

This leads us into Cycle Day 2 (CD2): Price has pulled back to a more neutral zone within the 5-day value area. Consolidation continues as today’s BIG Event is the CPI print at 8:30 am. We’ll mark 4515 (5d POC) as today’s Line-In-Sand (LIS) with a “jump-ball” for directional bias. As such, scenarios to consider for today’s trading.

Bull Scenario: Price sustains a bid above 4515, initially targets 4530 – 4535 zone.

Bear Scenario: Price sustains an offer below 4515, initially targets 4505 – 4495 zone.

PVA High Edge = 4532 PVA Low Edge = 4515 Prior POC = 4528

*****The 3 Day Cycle has a 91% probability of fulfilling Positive Cycle Statistics covering 12 years of recorded tracking history.

For more detailed information for both bullish and bearish projected targets, please visit: PTG 3 Day Cycle and/or reference the Cycle Spreadsheet below:

Link to access full Cycle Spreadsheet > > Cycle Day 2 (CD2)

Thanks for reading,

PTGDavid

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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!