Weekly Wisdom: CPI Cooler Than Expected

Greetings fellow traders and welcome to your November 10th edition of Weekly Wisdom: Levels to Know and Moves to Look For!

Let’s get to what we’re currently seeing in these crazy markets and what we have our focus on going forward.

Taking a look back on this week, November 7 – 11:

• CPI comes in cooler than expected Thursday morning! U.S. CPI YoY came in at 7.7% vs 8.0% expected. Core CPI YoY came in at 6.3% vs 6.5% expected.
• Markets had a big initial move following the CPI numbers with the SPX surging past 3915 Thursday morning. 
• VIX moved sharply down following the inflation report, reaching 23.50 – the lowest since early September.
• $UUP also moved sharply lower, well below the vital $30.00 level at $29.17 Thursday morning – also the lowest since early September.
• Interest rates moved sharply lower as well with the $TNX 10yr Treasury note off the highs it made at the 4.30% level, down to 3.85% Thursday morning.

And here’s what we are eyeing next week, November 14 – 18:

• Thursday morning’s low for SPX futures of 3755 is now a very important level for bulls to hold going forward. This low should not be broken if CPI is the catalyst bulls needed to finally get SPX to move toward its 200MA on the daily chart at 4080.
• Similar to the low for SPX, the high for VIX from Thursday (roughly 26) should not be reclaimed if Thursday is the ignition catalyst for SPX to head toward the 200MA.
• All things considered, bulls should be feeling the most comfortable they’ve felt in months. The battle is not over as we will need more months of cooling CPI data to confirm an inflation peak, but this is at least a start in the right direction.
• Tuesday, November 15 we’ll get follow up PPI data as well as the Empire State Manufacturing Index at 8:30 a.m. EST.  
• Wednesday, November 16 both the UK and Canada will report their CPI data. We’ll also get data for October US Retail Sales at 8:30 a.m. EST.
• Thursday, November 17 at 8:30 a.m. EST the Philly Fed Manufacturing Index and weekly unemployment claims data will be released.
• Friday, November 18 October’s existing home sales data is released at 10:00 a.m. EST.

Here Are Your Charts of the Week:

The big question everyone is trying to figure out: Are we going to have a hard or soft landing?  Are we going to be able to get inflation down without hurting the economy in a big way? 

Source: https://twitter.com/WallStJesus/status/1590293108188942336/photo/1

Source: https://twitter.com/WallStJesus/status/1590293184265220097/photo/1

SPY Daily / Weekly Update:

CPI gives the S&P 500 a solid boost – is this the ignition catalyst to move us toward the 200 daily moving average again?

The upper trend line resistance for SPY’s weekly chart should serve as a good target from this CPI ignition move. This just about lines up with the 200 daily moving average target.

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-Patrick Hawe

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Patrick Hawe’s current positions:

*As of 11:40am ET November 10, 2022

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