Daily Plan 7.12.23
Good morning readers!
In yesterdays session, the market displayed a notable trend of buying the dip, resulting in numerous winners throughout the day. Notably, the travel sector continued to surge, reaching new highs during the morning trading hours. Another significant development was the remarkable performance of gold, which is approaching the main target of $1951 after a robust rebound from its lows. Moreover, oil prices skyrocketed to unprecedented levels, surpassing the target of 74.8 and now trading above the 75 handles in the morning session.
Both the Emini and Nasdaq achieved their long targets at the market close and during overnight trading, reflecting a continuation of the upward momentum from the previous session. Overall, the prevailing trend remains valid, particularly with the strong defense exhibited by AAPL 0.00%↑ MSFT 0.00%↑ as they experienced a substantial increase after touching the trend pivot. This clear rejection of lower prices suggests the possibility of a strong rally today.
It is important to note that selling with a catalyst could potentially lead to a significantly larger decline, especially considering the highly anticipated data releases scheduled for today. Among these releases is the inflation rate, which has consistently declined, reducing inflation by over half and bringing it to 4% year-over-year. Unless there is a resurgence in inflationary pressures, there is no immediate reason to focus on this aspect. It is worth remembering that a sustained period of higher inflation is necessary, and as long as everything aligns with the Federal Reserve's plans, there is no need to propagate panic.
Looking ahead, the primary concern for the market will be the reduction of Core PCE (Personal Consumption Expenditures) as the Consumer Price Index (CPI) follows suit. However, it is worth noting that the Core PCE has yet to exhibit a significant decrease, indicating a potential challenge in bringing it down.
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