Daily Brief - Wednesday, 3/12/25
CPI surprised this morning coming in lower than expected across the board. Are we in for a relief rally today or will the larger macro fears of recession and future inflation dominate sentiment today?
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Wednesday - 3/12/25
8:30am EST - US CPI YoY (Expected: 2.9%, Actual: 2.8%)
8:30am EST - US CPI MoM (Expected: 0.3%, Actual: 0.2%)
8:30am EST - US Core CPI YoY (Expected: 3.2%, Actual: 3.1%)
8:30am EST - US Core CPI MoM (Expected: 0.3%, Actual: 0.2%)
Thursday - 3/13/25
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: 3.5%)
8:30am EST - US Core PPI MoM (Expected: 0.3%)
Friday - 3/14/25
10:00am EST - University Michigan Sentiment Prelim (Expected: 63.5)
Prior Session Stats and Analysis - Tuesday, 3/11/25
Session Open: 19,420.50
Session High: 19,686.75
Session VAH: 19,537.00
Session POC: 19,444.50
Session VAL: 19,312.25
Session Low: 19,201.00
Session Close: 19,393.00
Session Settlement: 19,399.00
Session Range: 485.75 pts, 1943 ticks
OI Change (Prelim): +11,051 (NQ) / -4,583 (MNQ)
Est Volume: 882,424
Prior Session Analysis
Yesterday’s session was a Neutral day with range extension on both sides of the Initial Balance resulting in a “D” shaped profile. This profile usually indicates enhanced trade facilitation in the market but limited opportunities at the extremes for cheap trades. We did not see the high momentum directional movement in yesterday’s session that we have grown accustomed to over the past couple of weeks.
Most of the extension was to the downside even though it was mostly a sideways day. We saw downward rotation in the value area and POC from the prior session indicating a drop in fair value. NQ saw another day of new business with the addition of +11,051 contracts. For the first time, however, the majority of those contracts were in the June 25 contract (NQM25) with +6k added and the remaining 5k added to the March 25 contracts (NQH25). Volume was higher yesterday than the preceding 4 sessions with 882,424 contracts traded.
The sisters did move in tandem yesterday, with ES and NQ having similar charts. ES added +29,700 contracts of new business.
It is not uncommon to see a sideways, “D” shaped day before a big news release, which we have this morning with CPI data coming out at 8:30am. Depending on the numbers, the volatility we have become used to may return in today’s session.
If you read my Trading Results post last night, I noted that very large other time frame participants emerged yesterday when price broke below the Weekly Kickoff Low in the area of 19,230-19,200. This will be an area to watch in upcoming sessions to see if those buyers are still present, if price returns to that area.
Plan for Today - Wednesday, 3/12/25
At the time of this writing, CPI data has come out lower than expectations across the board. The initial reaction from the market was very bullish and as of now price is almost +300 points above yesterday’s close, just above yesterday’s session range. However, the momentum from the initial reaction has not carried through and price is consolidating right at yesterday’s high. It remains to be seen if we will open inside of yesterday’s range or above with roughly 50 minutes until the NY open.
If price does auction above yesterday’s range by open and we open out of balance, I will be looking for an opening range breakout trade in the direction of the gap and gap rules will be in play.
If price auctions down inside of yesterday’s range by open and we open in-balance, I will be more patient and wait for trade setups to appear as the session progresses.
Regardless of either scenario, yesterday’s value area will be a no trade zone for me once again today.
One other potential situation I will be looking for today is a short squeeze. With so many shorts in the market right now, any considerable upward auction in price could cause some shorts to close, which could trigger other shorts to head for the door as well. I will be looking to take advantage of this scenario if it develops.
Levels I will be watching today:
19,940 - area of support and resistance on March 10th.
19,690 - area of yesterday’s high. If price opens above this and auctions down, I would look for this to provide some potential support. If it opens below, it could be an area of resistance. If price auctions above this and holds, it would be a clear sentiment signal for higher prices unless sellers are sitting somewhere above this waiting.
19,537 → 19,312 - yesterday’s value area. Inside of this will be a no trade zone for me. The top and bottom, however, could provide areas of support or resistance if price auctions above or below.
19,230 → 19,200 - yesterday, this area saw large other time frame participants step in with large buy orders when price reached it. If price retests this level in the coming sessions, I will be watching to see if they are still looking to buy at large quantities here.