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
Markets are reacting to world tensions, but most importantly in the USA, the Fed governors may finally be admitting that rates will have to rise precipitously to tamp down inflation. The Fed is even considering letting the bond market lead the rate hike expansion before adding its own pressure of a rate hike. There is only one problem with that. Unless the U.S. House of Representatives does not cap spending (all of which is being printed at present), then the crazy train of rate hike spirals could eventually wreck the U.S. Dollar as the risk of default becomes almost imminent. It would also help tremendously if we backed the currency with a basket of commodities and precious metals, but it will take some real pain to make lawmakers do the proper thing. I shall not hold my breath in the prospect of that occurrence.
I think the worry about rates and how it will affect U.S. and global bond and equity markets is best expressed by Paul Tudor Jones. At some point, there will be an inflection point that will force equity prices that express real rates of return. Those forces will be influenced by real risk-free rates of return AND the pressures of credit on borrowing, which will be needed in future expansion. The pain of the mean reversion could be quite severe, but I have been ranting about this since 2007-2008, so I will simply move on with analysis. PPI ( Producer Price Index ) will tell the tale of supply chain inflation this morning at 0830 EDT, and I have no idea which way that will go.
Let’s look at the charts.
If MNQZ23 can remain above the 15288 VWAP line, it should be rather clear sailing to push past the swing high at 15383.50 and onward to 15440.75 and 15513.50 by Thursday. The reason for that estimate is that commercial holdings are sparse in that price range, and buyers could push prices higher as I mentioned this past weekend.
If MNQZ23 cannot remain above 15288, then it will be equally possible for a short trip back to 15202.75 to 15160 as support, but failing that, and given the lack of commercial holdings underneath that support, prices could easily fall back to the 15173 swing low and beyond to 15115.75 and 15043 by Thursday.
The likelihood of large price ranges today could indeed be dependent on Fed reaction to PPI data (that comes this afternoon).
I did not trade yesterday, but I will attempt to trade this morning as ranges seem ripe for a large price move as eventually happened yesterday. Wacky is the best way to describe this market, as volatility and world political and economic news combine for fireworks. We are stuck in the maelstrom and we will simply have to hunker down until it ends, taking advantage of what our trade plans will allow.
That is it for me today. Have an enjoyable, productive, and profitable fall day this Wednesday. Thank you for continuing to support this Substack blog!
Today’s Economic Data Courtesy of Trading Economics dot com. Be sure to refresh the date at the top left.
