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
The markets rallied as PPI and core PPI dropped 0.5% and 0.1%, but the rate of inflation at the producer level was still running at 3.4%. Freight rates have dropped precipitously after the government-forced “covidiocy” slackened the economy and caused supply chain disruptions. What needs to be seen is if slackening demand combined with tightened credit slows us down once again, and revenues to the government are cut back because of the forced collapse of industry, and that is when rates may again cause issues because all spending will be (as it has now for over 2 years now) done by printing money, which will, of course, drive inflation higher, unless SPENDING IS REDUCED DRASTICALLY, which will have to be done to prevent Weimar conditions from setting in. With the kind of people, we have in Washington running things, anything can and will happen. The problem going forward is a greater majority of things will be bad unless spending is cut and our currency is backed by more than shallow words and shallower policies.
Let’s get back to trading, shall we?
MNQM23 seemed a bit overbought as the U.S. session ended yesterday, and continued to be overbought in Asian markets. MNQM23 simply idled until the 0500 EDT hour in Europe when selling came in. The binary indicator which shows the force of volume has run negative. The only question is, will data today reverse that selling force and drive prices higher, or will traders take profits for the weekend and chill out (or get nervous even) over the weekend as they look at data?
Resistance around 13228.50 has been tough recently, but if MQNM23 can rally above that VWAP line, then it’s entirely possible that 13228.50 can be breached and that 13302.25 and 13396 are possible by early next week. If not, we probably fall back to key support around 13077 to 13015, and if selling gets expanded, back to 12957.25, 12883.50, and perhaps even 12789.50 by early next week. Since today is Friday, once all the data is out, traders may decide to park things at support, but I have no idea how that reaction will turn out.
What I will do in this case is to find the most advantageous points for a breakout in either direction and if it does not hit in the morning trade, I will simply hold off. Not finding solid breakouts yesterday morning cost me 2 NQ points for the opportunity, but I did not blow up significant capital to be bounced on tight stops. Had I been able to trade during the afternoon I would have been rewarded, but it didn’t happen. I did instead job one for a trader, which was to protect equity.
I will saddle up again this morning to see what opportunities there are. I hope you have a happy, productive, and profitable Friday. More will come on the weekend and more will be coming at random moments in the Substack notes as I have time to do so.
Today’s Economic Data Courtesy of Trading Economics dot com. Be sure to refresh the date at the top left.
