The S&P 500 (ES) has rallied over 8% from the lows in late October. November seasonality coupled with a rally in treasuries has provided relief for the broad index. Can we test 52-week highs before the end of the year?
As we look at recent inflation data (CPI), the month of October showed that the U.S. experienced no increase in inflation. This report was largely driven by a decline in energy prices like Crude and Gasoline. The shelter component also showed an increase in the month of October, although the increase was less than the increase in the month of September.
The Producer Price Index for final demand was deflationary, as PPI fell 0.5 percent in October, seasonally adjusted, after advancing 0.4 percent in September. Estimates forecasted an increase of 0.1 percent for the month in October.
This data is significant for the market, as we can see the bond market has repriced future interest rate expectations. The CME FedWatch tool is now pricing in a 50% probability that the FOMC cuts interest rates by 25bps by May of 2024, and a 20% probability that the FOMC cuts interest rates by 50bps. Altogether this means that current expectations show a 70% chance of the FOMC cutting interest rates by 25bps or more in May of 2024.
As momentum has been gained in this last week’s trade, to see more strength, we would need to see a break and close above the significant 4575 level, before retesting 52-week highs.
Check out CME Group real-time data plans available on TradingView here: tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
As we look at recent inflation data (CPI), the month of October showed that the U.S. experienced no increase in inflation. This report was largely driven by a decline in energy prices like Crude and Gasoline. The shelter component also showed an increase in the month of October, although the increase was less than the increase in the month of September.
The Producer Price Index for final demand was deflationary, as PPI fell 0.5 percent in October, seasonally adjusted, after advancing 0.4 percent in September. Estimates forecasted an increase of 0.1 percent for the month in October.
This data is significant for the market, as we can see the bond market has repriced future interest rate expectations. The CME FedWatch tool is now pricing in a 50% probability that the FOMC cuts interest rates by 25bps by May of 2024, and a 20% probability that the FOMC cuts interest rates by 50bps. Altogether this means that current expectations show a 70% chance of the FOMC cutting interest rates by 25bps or more in May of 2024.
As momentum has been gained in this last week’s trade, to see more strength, we would need to see a break and close above the significant 4575 level, before retesting 52-week highs.
Check out CME Group real-time data plans available on TradingView here: tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.