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’s Halloween 2023 and things do seem scary. Almost every party in the Middle East wants war, including Turkey . Iran seems reluctant to engage, but may be forced into it. I don’t think the USA is ready for what could quickly escalate into a four-front war (which would include a PRC invasion of Taiwan) as our armaments are exhausted and our military forces are the smallest they’ve ever been since 1940. We will have to see what happens.
On the economics front, there is certainly discussion about whether or not a pause in rate hikes is needed on Wednesday when Fed Chairman Jerome Powell will reveal future Fed policy. Has the interest rate yield finally tapped out? That could be the critical question of the decade for the USA and for world trade in an era where BRICS nations consider pulling away from the U.S. Dollar.
The answer is likely found through this discussion of the effects of inflation on GDP. If one understands managerial accounting, one knows that earnings can increase through either price increases, production increases or both in combination. When GDP rises during times of inflation, a lot of that GDP growth can actually come from raising prices, not improving the productivity of manufacturing or services.
When I read this article from the Wall Street Journal about the Fed pausing its rate hikes, I had to wonder if the Fed is unaware of the economic principle I mentioned above or whether the entire metric of inflation is purposefully or incompetently underestimated by the U.S. Bureau of Labor Statistics. If inflation is well above the almost 4% it is being measured as now, price increases will at some point choke off demand and lead to higher unemployment as people cannot afford to buy the goods they need. Notice how food prices continue to escalate, and rents are insanely high now? When printing fiat currency (currency with no value, which is what the U.S. Dollar IS currently) and there is no limit to that spending until January 2025 under the current “continuing resolution”, the phenomenon described in that Investopedia video is the likely result. Recession and economic contraction are on a horizon where money supply is out of control. This was the topic of a podcast produced yesterday. Sadly, Tara Servatius is not an economist, she wants to add inflation numbers when in fact, that inflation year after year must be MULTIPLIED, not added. Still, her point is well made. We have to get a handle on money supply AND we must stabilize the currency by backing it. Other nations are figuring that out again after years of fantasy fiat printing. The last half of the podcast deals with antisemitism, so you can choose to tune that out if you want.
I will try to pull some other data on ground floor street level inflation at another time. Let’s look at the charts.
If MNQZ23 remains above the 14343.75 VWAP line, it has a perfect chance to take out the 14472 hourly swing high and run beyond that to 14513.25 and 14565.75 by Wednesday. If not, there is support around 14343.75, but failing that, it would be a very short trip back to the swing low at 14320.25 and lower to 14279 and perhaps 14239 and 14226.50 if sellers become active.
We will probably see the most volatility tomorrow when the Fed makes its announcement, but it could go either way. There is a lot of room above and below these price levels as there is a dearth of commercial holdings above or below the price ranges. That means opportunity for traders as long as risk is managed.
I got bounced for a 20 NQ point loss per contract going long yesterday, as, much like the previous Monday, volume was quite volatile as I would assume retail traders and algorithmic traders got busy yesterday. I will saddle up again this morning to see what opportunities there are to trade.
That’s it for now. Have a pleasant and profitable Tuesday!
Today’s Economic Data Courtesy of Trading Economics dot com. Be sure to refresh the date at the top left.
