Weekly Wisdom: Data Favors Rate Cuts, Fed Not Budging

Greetings fellow traders and welcome to your June 13th edition of Weekly Wisdom: Levels to Know and Moves to Look For!

Now let's get to what we're currently seeing in these volatile markets and what we have our focus on going forward.

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Taking a look back on this week, June 10 - June 14:

• Markets were once again boosted up to new all time highs this week with the help of some favorable inflation data, with both CPI and PPI coming in lighter than forecasted.??
• The light inflation numbers helped send interest rates lower, with $SPX futures reaching new all time highs of 5454 on Wednesday.??
• Data for the week kicked off on Tuesday with the NFIB Small Business Index delivering 90.5 vs 49.8 expected. The 10-year bond auction in the afternoon was well received and helped boost bonds higher / send interest rates lower.?
• Wednesday delivered favorable data for the Fed with CPI y/y coming in light at 3.3% vs 3.4% expected, CPI m/m coming in at 0.0% vs 0.1% expected, and core CPI m/m also light at 0.2% vs 0.3% expected. The Fed left interest rates unchanged in the afternoon meeting, and re-emphasized the need for further data and evidence to support cutting interest rates, despite more and more data coming with negative surprises.??
• Thursday brought further favorable data for the Fed, with PPI y/y coming in light at 2.2% vs 2.5% expected, PPI m/m light at -0.2% vs 0.1% expected. core PPI y/y light at 2.3% vs 2.5% expected, and core PPI m/m also light at 0.0% vs 0.3% expected. Weekly unemployment claims were higher than expected at 242,000 vs 225,000 expected. The 30-year auction in the afternoon was again well received, further boosting bonds higher and interest rates lower.??
• Friday, June 14 ends the week with import prices m/m at 8:30 a.m. ET. This is followed by prelim University of Michigan consumer sentiment and inflation expectations at 10:00 a.m. ET. At 11:00 a.m. ET.? Finally, we’ll see the Fed monetary policy report at 11:00 a.m. ET.?

Here's what we are eyeing next week, June 17 - June 21:

Level Highlights:

• $SPX futures, as mentioned above, have made another new all time high this week with help in multiple areas, including a huge rally in $AAPL after their presentation, as well as lighter than expected inflation data, which should support the Fed to cut interest rates at some point this year.??
• $SPX futures were consolidating in front of 5375 resistance before Wednesday’s inflation data, which sent the index up to a new high of 5454.??
• Bulls should now use 5375 as a new momentum level to take caution should we close back below the level, up from the 5325 level mentioned last week.??
• Bears will need a break above 13.50 on the $VIX for any real selling to take place - otherwise, bulls remain in control until the narrative changes or they trade up too far too fast and get ahead of themselves.??

Upcoming News:

• Monday, June 17 starts the week off with the Empire State Manufacturing Index at 8:30 a.m. ET.??
• Tuesday, June 18 delivers retail sales m/m and core retail sales m/m at 8:30 a.m. ET. We’ll then see industrial production m/m and capacity utilization rate at 9:15 a.m. ET. These are followed by business inventories m/m at 10:00 a.m. ET.??
• Wednesday, June 19 markets are closed for Juneteenth.??
• Thursday, June 20 starts off with weekly unemployment claims, building permits, the Philly Fed Manufacturing Index, the current account update, and housing starts all at 8:30 a.m. ET.??
• Friday, June 21 ends the week (and kicks off summer) with flash manufacturing PMI and flash services PMI at 9:45 a.m. ET. We’ll then see existing home sales and the CB Leading Index m/m at 10:00 a.m. ET.??

Here's Your Chart of the Week:

Via BofA Global Research

Source

SPY Daily Update:

$SPY is trading in new all time high territory after the inflation data came in favorable for the bulls this week. A close back under 532 would potentially end market momentum.

SPY Weekly Update:

$SPY weekly chart has continued the uptrend after a couple of weeks of sideways chop - bulls remain in control until we see a close below 532, or if bulls get too ahead of themselves and trade toward 555-560 in the next week or two.?

Want to Trade With My Team? Click here!

-Patrick Hawe

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Disclosures

Patrick Hawe's current positions:

*As of 2:43pm ET June 13, 2024

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