Today’s CPI report will guide market direction
Tuesday left us with red across the broader indexes and volume finally showed up to participate. Which left us with a distribution day on the Nasdaq and NYSE. The good news is the market turned off the lows at noon, until then the volume was lighter than the prior two days. Then picked up as the upside came in and we rallied off the lows.
This is a sign the dip was bought and it quite possibly let some shorts out of positions. I’m sure none of us know that “I’m stuck feeling†so we can’t sympathize but we can show empathy and be happy the market worked off some of the overbought conditions. Okay yes I’m feeling pretty good since we nailed Monday and Tuesday almost to the tick, but now onto Wednesday. Which could be a bit harder to read.
Going into Wednesday we had good earnings for the most part Monday after the bell and again Tuesday a few nice surprises with INTC and IBM moving nicely. YHOO came in weak and will put the internets on watch with Ebay and Google to come this week. CPI will set the tone for the day, if that data is anything like the PPI we could see the market weaken. Data that puts inflation to rest will rally us and continue the push up. Even great earnings for the big caps cannot over shadow economic conditions so CPI will be more important than the positive tone we ended the day on. I am pretty neutral into Wednesday and expect a pretty jittery day, I doubt it will be as directional as Monday and Tuesday were. So expect some twists and turns along the way.
Crude fell $1.01 to close t $58.93. OPEC meets Thursday to determine output and try to get some control on the volatility of crude pricing. So I think today’s slide was just some positioning and profit taking ahead of Wednesday’s inventory and Thursday’s meeting. Crude up at $77.00 in July and now down to 58, the need to intervene is put on OPEC and we’ll hear what they have to say Thursday. I guess they don’t trade futures or Google, doesn’t seem that volatile to me…hahah Gold fell $5.00 to close at $593.50, which could provide a buying opportunity as Northern Korea puts another nuclear test on the forefront.
Some earnings of interest for the Week of October 16-20 Wednesday pre market — ABT, ASML, BSX, CIT, GD, JPM, and after the bell — AMD, ALL, AMLN, AAPL, COF, CTXS, CSX, CBST, ET, EBAY, GILD, ISIL, KMI, NVEC, RYL, SSTI, STLD, WM, WSTL. Thursday pre market — BAC, BK, BBT, BBW, C, KO, CAL, CY, LLY, FITB, HON, MCD, NDAQ, NUE, OXPS, BTU, PFE, RS, SAP, POOL, LUV, UNH, UPS, WYE and after the bell — ACS, BRCM, CREE, FNB, GOOG, PMCS, RMBS, RBAK, SNDK, SYNA, XLNX. Friday pre market — MMM, CAT, MRK, SGP, SLB, WL.
Week of October 16th — October20th: Wednesday 08:30 Building Permits, 08:30 Core CPI, 08:30 CPI, 08:30 Housing Starts, 10:30 Crude Inventories, Thursday 08:30 Initial Claims, 10:00 Leading Indicators, 12:00 Philadelphia Fed, Friday nothing due out.
ES (S&P 500 e-mini) Tuesday brought the drop into the weekly pivot and a bit more. A full 38.2% retracement was reached and we rallied off the lows to still leave a gap overhead. Wednesday’s pivot is 1370.00, that will be a good support point going into Wednesday. Pre market is likely to be very active with the CPI data due pre market. PPI definitely sparked the inflation worries and CPI is a better measure. This could tell us the Fed may not be finished with rate increases and with the FOMC meeting next week this will be key data. Support: 1370, a break there would lead us back to 1366.25 and onto 1364. Resistance: 1374, 1375.25-1376, 1378.25 and onto 1382.25.
BKX (Banks) closed -..03 at 114.02. Support: 113.96, 112.95, 112.06 50dma. Resistance: 114.91, 115.42, 116.25, 117.48
Good trading to everyone, out day will start early.
Teresa Appleton has traded equities and options for
nine years and futures for seven. She founder and CEO of TradeLogic, LLC. For
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