Daily Brief - Thursday, 2/13/25
After the hot CPI report, NQ saw its second-highest influx of news business yesterday. Today, it's up on hot PPI data. Hot inflation data? No one cares.
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:
NQ rallied to take out the news pivot from the CPI report yesterday by 2:45pm. Hot inflation reports apparently don’t matter to the market in the current environment.
PPI data was mostly hot this morning, and the market is up on the news.
My current theory for this behavior is that hot inflation data could be seen by the market as a potential deterrent against tariffs being enacted, which could worsen inflation.
I will only be looking for momentum based trades today, levels don’t matter as much in this market environment.
Upcoming News
Today - Thursday - 2/13/25
8:30am EST - US PPI YoY (Expected: 3.3%, Actual: 3.5%)
8:30am EST - US PPI MoM (Expected: 0.3%, Actual: 0.4%)
8:30am EST - US Core PPI YoY (Expected: 3.3%, Actual: 3.6%)
8:30am EST - US Core PPI MoM (Expected: 0.3%, Actual: 0.3%)
8:30am EST - US Initial Jobless Claims (Expected: 216.5k, Actual: 213k)
8:30am EST - US Continued Jobless Claims (Expected: 1.888M,Actual: 1.850M)
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 - Wednesday, 2/12/25
Session Open: 21,551.00
Session High: 21,839.00
Session VAH: 21,840.00
Session POC: 21,783.25
Session VAL: 21,693.00
Session Low: 21,536.25
Session Close: 21,802.00
Session Settlement: 21,804.75
Session Range: 302.75 pts, 1211 ticks
OI Change (Prelim): +6,191 (NQ) / +2,443 (MNQ)
Est Volume: 543,023
Prior Session Analysis
Yesterday’s session was a Normal Variation day to the upside. The market opened with a gap down due to the hot CPI report at 8:30am. The news pivot for the CPI report was 21,825.75 and dropped over 300 points to a low of 21,510.75 at 9am.
The market rallied throughout the day, which was unexpected, finally taking out the CPI news pivot at 2:45pm. When news pivots are taken out, it indicates that the news that caused the move is no longer relevant to participants. This leads me to question, does hot inflation not matter to the market now?
My initial thought for an explanation for yesterday’s bullish price action was that it could be shorts covering, providing upward momentum to the price. However, when that happens, you generally see a loss in open interest. On the contrary, NQ saw the second most significant increase in new business yesterday since Jan 27th, adding +6,191 contracts and significant volume. This indicates these were new longs entering the market yesterday after the hot CPI report.
The only logical theory I can think of in regards to why the market would react bullishly to hot inflation data is that tariffs are more important to the market than rate cuts right now. The market might be viewing hot inflation data as a potential deterrent to the Trump administration moving forward with tariffs, which could worsen inflation. It’s just a theory, I could be completely wrong but it’s the best theory I have come up with.
Plan for Today - Thursday, 2/13/25
The PPI reports came out at 8:30am; the data was mainly hot, just like yesterday's CPI report. However, the overnight market has reacted bullishly to the news, with prices currently up almost 90 points.
If this price action continues into the open, we will open out-of-balance to the upside today. Gap rules will apply.
As I mentioned yesterday, when the market behaves like it currently is, levels will not be as important or respected by price. My plan for today will be momentum trades; an opening range breakout trade, and VWAP/8-13 EMA trades.