Price, Price Spread, Lagged Price/Volume Spread, and Binary Price/Volume Indicator
Price and Total Volume With 50-period Moving Volume Average
Fibonacci Price Scale With Targets
It seems MNQH24 is poised to completely break out from the old monthly swing high at 16469.25, and is idled around 16613.50 in anticipation of PPI data and today’s Federal Reserve rate decision.
The Fed seems unconvinced that rates should be cut, if you read things like tradingeconomics.com and The Wall Street Journal, basically underscoring the fact that services are under pressure to to raise wages to cope with the price increases that are making life unaffordable for most consumers as you have seen in previous videos I have posted in the past few days (which you folks should watch). Prices do not collapse to old levels, they stick. Of late, they have stuck at higher rates than have been seen in modern American history, save for the founding of the republic and the banking crises of the early 19th century. As you can see in this linked chart, wages are again rising, and that leads to cost escalations to cover increased labor costs.
On the other side of this battle are investors, both individual and institutional, who are sitting on cash in anticipation of the next rate cut to drive prices to higher levels. That may or may not happen, which could derail the rally from pandemic lows. While the NASDAQ 100 is held up by basically 7 corporations, the Russell 2000 is a minefield of zombie companies, and high-interest rates or rate hikes will increase the “equity killing fields” of companies where malinvestment was their principal reason to exist.
The other issue the Fed and Americans generally should be concerned about from a currency standpoint is that China is not playing ball with foreign debt restructuring the United States did in the 1980s as I studied in graduate school. Their solution is to capture resource businesses for themselves through private debt restructuring. That is a form of resource capture by a nation not happy with dealing with Western businesses and the SWIFT system of payments. In my opinion, that is the first move in business terms of de-dollarization. China and other BRICS nations may continue such action in conjunction with China’s Belt and Road economic policies. That will affect our interest rates eventually if our debt rating continues negative. If BRICS nations abandon the U.S. Dollar, rates will have to escalate rapidly to pay for our profligate spending, and American standards of living under our fiat currency will plummet dramatically. If our politicians actually cared about the fragility of the American economy, they might shore up our fiscal difficulties and put us on a free-market path to economic growth.
In other news, it appears that the SpaceX IPO is capturing more interest among investors as it appears it can raise $180 billion in capital. Even though the company is dependent on NASA for a large chunk of its revenues, the Starlink satellite internet business holds strong potential for private business growth. That business will likely not have to be subsidized like the NASA business, and certainly not to the degree that Tesla is.
And the climate zealotry rolls on as well. It appears that COP28 has come to a major agreement to turn away from fossil fuels like coal, natural gas, and crude oil. What has yet to be determined is how the world will be heated and cooled and how world industry can run without base-loadable fuel and the technology associated with it. I assume it is better to make political statements than to actually help the world economy. I would suggest that someone interview a German citizen who understands how insane such policies are as that nation deals with its energy problems, racked by years of green energy initiatives. Journalists might not want to do that, as it is warmer in the UAE and the food at COP28 is probably better too. German beer however could be the tiebreaker if one thinks about it seriously.
We can return to these topics again later. Let’s look at the charts.
If MNQH24 can remain above 16451, it seems almost inevitable if buyers remain aggressive that it will break above the swing high at 16613.50 and rally perhaps to 16672.50 and 16747.50 by Thursday. If that does not happen, then we likely will see a retest of 16451, and failing that, a retest of the swing low at 16396.50. If that fails with aggressive selling action, we could see prices at 16337.50 and even 16262.50 by Thursday. We will simply have to see how prices react this morning with PPI and with the Fed rate decision at 1400 EST today to gauge reaction. I have no clue which way the market will move. All I can do is look at the volume profile, volume, price momentum, and pattern formation before trading to see if it fits my trade plan. There is a dearth of commercial holdings above and below the current price ranges, so anything can happen.
I picked up 30 NQ points long per contract on an early breakout. I was able to wait until the volume was strong enough to press prices to that 127.2% expansion target and get taken out by a limit order. If volume settles with the trend, these trades can be easy. When it doesn’t, which it hasn’t for the last few days, it is better to stand down.
That is all for me today. Have an incredible Wednesday everyone! Thanks again for supporting this Substack. We have now eclipsed a 50% subscription increase over the last 45 days, and that is because of you!
Today’s Economic Data Courtesy of Trading Economics dot com. Be sure to refresh the date at the top left.
