Daily Analysis - Tuesday, 1/14/25
With PPI coming in cool this morning, all eyes are on tomorrow's more Important CPI. With an estimated 1% move from the CPI report, is this the opportunity to stop selling and find solid ground?
Disclaimer
This publication and its authors are not licensed investment professionals. Nothing posted on The Shmuts blog should be construed as investment advice. Do your own research.
The Week Ahead
All eyes will be on this week’s PPI & CPI inflation reports after Friday’s employment numbers came in very high.
Today - Tuesday - 1/14/25
8:30am EST - US PPI YoY (Expected: 3.5%, Actual: 3.3%)
8:30am EST - US PPI MoM (Expected: 0.4%, Actual: 0.2%)
8:30am EST - US Core PPI YoY (Expected: 3.8%, Actual: 3.5%)
8:30am EST - US Core PPI MoM (Expected: 0.3%, Actual: 0.0%)
Wednesday - 1/15/25
8:30am EST - US CPI YoY (Expected: 2.9%)
8:30am EST - US CPI MoM (Expected: 0.3%)
8:30am EST - US Core CPI YoY (Expected: 3.3%)
8:30am EST - US Core CPI MoM (Expected: 0.2%)
Thursday - 1/16/25
US Retail Sales MoM (Expected: 0.6%)
US Initial Jobless Claims (Expected: 210k)
Friday - 1/17/25
8:30am EST - US Housing Starts Number (Expected: 1.325M)
9:15am EST - US Industrial Production MoM (Expected: 0.3%)
Prior Session Stats and Analysis - Monday, 1/13/25
Session Open: 20,765.75
Session High: 20,978.25
Session VAH: 20,910.50
Session POC: 20,877.25
Session VAL: 20,761.00
Session Low: 20,702.00
Session Close: 20,948.25
Session Settlement: 20,947.25
Session Range: 276.25 pts, 1105 ticks
OI Change (Prelim): +10,655 (NQ) / +8,165 (MNQ)
Prior Session Analysis
Yesterday’s session was a Normal Variation day with range extension to the upside.
Initially, the session showed the potential for a sideways, choppy day. Around noon, a news report came out that the Trump administration was considering a slow rollout of tariffs to minimize any inflationary effects. Equities across the market rallied on the news.
NQ saw a moderate amount of new business come in yesterday, approximately +10,655 contracts. It’s reasonable to assume these new contracts were long. That is a good sign for bulls.
The bigger question, looking at the longer timeframe chart, is whether yesterday’s session was a relief rally back to the mean before heading further down or a sign of the continued selloff coming to an end. I believe the answer to that question will come tomorrow morning.
All eyes will be on the CPI report tomorrow at 8:30am. We will see a preview with the producer price index report this morning. Traders are currently pricing in a 1% move in the S&P based on the report tomorrow, if CPI comes in cool we could see equities rally further. A hot CPI would likely cause continued selling in the market.
Plan for Today - Tuesday, 1/14/25
At the time of this writing, the PPI data has been released and came in below expectations across the board. This has been met by a positive reaction from the market.
Overnight inventory is long, above yesterday’s session high by approximately 80 points. If this price holds or continues to auction upward we will open out-of-balance with a gap to the upside.
Trading plan for the day:
Bullish: If we open with a gap to the upside, gap rules will be in place. An opening range breakout is my go-to trade on gap days. Sometimes these breakouts are easy to miss a good entry, if I miss I won’t chase, I’ll wait for a pullback to enter. If a breakout does not occur and price auctions down, I will look for support and rejection around yesterday’s high at 20,978 and then below that at yesterday’s value area high at 20,910. Below that we will be in yesterday’s value area and I’m hands off any bullish trades.
Bearish: As mentioned above if a continuation of the gap does not occur, I will look for price to auction down below yesterday’s value area high before entering any short positions. If price does auction below the value area high, it has a good chance of auctioning all the way down to yesterday’s value area low around 20,761. Price found good support, with multiple tests yesterday around 20,700 so I will be out of any shorts before price gets near that level.
"A good day trader doesn’t predict the market; they react to what’s happening in the market." – Unknown