Daily Brief - Monday, 2/10/25
Reciprocal tariff news sent the market lower on Friday, over the weekend, tariffs on steel and aluminum were announced. Yet NQ is up in overnight trading. Will the NY session participants agree?
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.
TLDR
Tariffs are the dominant theme of the market currently. Friday’s announcement of reciprocal tariffs sent the market lower. Over the weekend came an announcement of 25% tariffs on all steel and aluminum imports.
NQ is surprisingly up in overnight trading by 180+ points. We will open in-balance from Friday’s session.
In the news this week, we have some market movers with Fed Chair Powell testifying in front of Congress on Tuesday & Wednesday. We also have CPI and PPI on Wednesday & Thursday.
Upcoming News
Tuesday - 2/11/25
10:00am EST - Fed Chair Powell testifies in front of Congress.
Wednesday - 2/12/25
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: 3.1%)
8:30am EST - US Core CPI MoM (Expected: 0.3%)
10:00am EST - Fed Char Powell testifies in front of Congress.
Thursday - 2/13/25
8:30am EST - US PPI YoY (Expected: 3.2%)
8:30am EST - US PPI MoM (Expected: 0.3%)
8:30am EST - US Core PPI YoY (Expected: 3.3%)
8:30am EST - US Core PPI MoM (Expected: 0.3%)
8:30am EST - US Initial Jobless Claims (Expected: 216.5k)
8:30am EST - US Continued Jobless Claims (Expected: 1.888M)
Friday - 2/14/25
8:30am EST - US Retail Sales MoM (Expected: -0.1%)
9:15am EST - US Industrial Production MoM (Expected: 0.3%)
Prior Session Stats and Analysis - Friday, 2/7/25
Session Open: 21,886.00
Session High: 21,968.00
Session VAH: 21,734.75
Session POC: 21,621.00
Session VAL: 21,577.50
Session Low: 21,552.75
Session Close: 21,588.25
Session Settlement: 21,590.75
Session Range: 415.25 pts, 1661 ticks
OI Change (Prelim): -984 (NQ) / +3,669 (MNQ)
Est Volume: 592,948
Prior Session Analysis
Friday’s session was a Normal Variation day with significant range extension to the downside.
Off the open the market initially auctioned higher, flirting with the 22,000 level, getting as high as 21,968. News broke right around 10am, with Trump announcing reciprocal tariffs on any country that imposed trade duties on US imported goods. This sent the market down for good from its high of the day.
After the initial leg down, the market went into a price action pattern called the “retail rinse”, where price gyrates up and down in a range. This pattern catches traders positioning for a breakout and sweeps stops. Most often, retail traders get caught by this price action, hence the name for it.
The market did try to rally with price auctioning higher between 12pm - 1pm. The prior session low combined with VWAP worked as resistance to hold price and ultimately caused it to auction lower, flattening out around the 21,580 area where it stayed into close.
The volume on Friday was more than double the prior session on Thursday.
What is interesting to me is the generally minor change in Open Interest, a loss of only -984 contracts, compared to the very high volume. This indicates the potential that longs were opening new positions into the selling on Friday.
Plan for Today - Monday, 2/10/25
At the time of this writing NQ is up 180 points from Friday’s close, which puts it right in the middle of Friday’s range. It appears we will open in-balance this morning.
In addition to reciprocal tariffs on Friday, over the weekend, Trump also announced immediate 25% tariffs on all steel and aluminum imports. Equities for US metal producers such as US Steel and Alcoa are up significantly this morning.
I’m unsure if this bounce overnight is due to a natural market reaction to the sell-off on Friday or if the market sees some positive in the tariffs on steel and aluminum imports. Either way I am a bit surprised by it.
My plan today is to be patient. I want to see whether the participants in the NY session agree with this overnight price auction upwards or if they will reject it and auction price lower. Once I can gain a gauge of sentiment for the day that will inform my bias and which direction I will be looking for trades.