Daily Brief - Tuesday, 2/11/25
All eyes will be on Powell's first day of Congressional testimony today. There will be volatility, but which way will he send the market?
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
I apologize for the abbreviated report this morning. I’m under the weather, but I wanted to get out what I felt was most important.
NQ saw its most significant increase in new business yesterday since Jan 27th on moderate volume and a very tight session range of only 150 points.
Yesterday’s tight range resulted from the market preparing for bigger news events starting today.
Markets will be watching Powell’s testimony today and tomorrow starting at 10am. It is likely Congress will ask him about details on the trajectory of inflation, rate cuts, and his stance on the Trump administration’s policies. Expect that markets can and will move based on his responses to various questions.
Tomorrow we will see the first batch of key inflation data with the CPI report at 8:30am. This is the Fed’s preferred inflation report and will be impactful on the market if it comes in either hot or cold. Thursday will see the manufacturer’s inflation report, PPI, released. It is impactful but arguably not as impactful as the CPI report.
Upcoming News
Today - 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 - Monday, 2/10/25
Session Open: 21,764.25
Session High: 21,894.00
Session VAH: 21,892.50
Session POC: 21,866.25
Session VAL: 21,840.00
Session Low: 21,744.00
Session Close: 21,843.75
Session Settlement: 21,846.50
Session Range: 150 pts, 600 ticks
OI Change (Prelim): +6,265 (NQ) / +1,177 (MNQ)
Est Volume: 386,037
Prior Session Analysis
Yesterday’s session opened in-balance and resulted in a Neutral Extreme day to the upside. Participants in the NY session went with the overnight activity, auctioning price up off the open before price settled into a tight range for the rest of the session that rotated between approximately 21,880 and 21,820 areas.
The session range was tiny, with only 150 points between the high and low of the session. There were few trade opportunities for momentum traders except off the open. It was an ok day for range traders, but the tight range reduced profit potential.
This tight range did produce, however, the single largest daily increase in new business since Jan 27th with the addition of +6,265 contracts.
The volume was 386k contracts, which is significantly lower than Friday’s session but higher than last Thursday's, Wednesday's, and Tuesday’s sessions.
Plan for Today - Tuesday, 2/11/25
At the time of this writing, overnight inventory is short, -150 points below yesterday’s close and out of balance to the downside from yesterday’s session. Gap rules will be in effect off the open.
I expect choppy, rangy price action until Powell’s testimony starts at 10am. I believe the price action we are seeing overnight is participants adjusting for potential volatility caused by his testimony, and I believe we will see some.
Anything can happen based on the questions and answers during the testimony. If you are trading I suggest you watch the hearing live. Either way, always use sound risk management techniques and take profit when you see it.
I don’t believe that levels will matter as much today as usual. When a market is news-driven like today, it tends not to respect levels as much because emotion is higher. Pay attention to what the market is telling you, not what you want to be happening.