This week, the market’s going to be all about the data, and after today’s FOMC minutes dump, that data starts with the Consumer Price Index on Thursday and the Producer Price Index on Friday.
If you’re like me, you’ve been eyeing these reports for clues on where inflation is headed and what kind of ripple effects it might have on market direction. The stakes are high, and while we’ve seen a slow melt-up in the broader indexes, this week’s economic reports could be the catalyst that either fuels further gains…
Or throws a wrench into the current trend.
Let’s talk about the CPI first. With inflation on everyone’s radar, a lower-than-expected CPI print could give markets an initial boost. It might even make the case for the Federal Reserve to pause on interest rate hikes, which the market would likely celebrate in the short term.
But here’s the thing…
This rally could already be priced in. We’ve seen this pattern before: The market anticipates a positive CPI number, runs higher before the report even hits, and then sells off once the numbers are out.
So, while I’m watching for that initial pop, I’m also wary of the classic “buy the rumor, sell the news” scenario playing out here. We’re seeing signs of overbought conditions on the weekly charts, and if the market runs out of steam, we could be looking at a pullback.
Now, the PPI on Friday adds another layer of intrigue.
The PPI tells us what’s happening on the production side, which can be an early indicator of future consumer inflation. If we see rising costs at the producer level, it could mean that companies will start passing those costs on to consumers, keeping inflation elevated.
That’s not the news the Fed — or the market — wants to hear.
If both CPI and PPI numbers come in hotter than expected, I wouldn’t be surprised to see volatility spike, especially with yields edging higher and the Fed back in play for another rate hike instead of a cut.
Here’s the important part: how I’m positioning myself…
I’m not getting overly aggressive right now. I’ve seen enough of these data weeks to know that they can flip the script in a matter of minutes. So I’m keeping an eye on key levels — especially in the S&P 500 — and watching for any signs of divergence that could signal a pullback.
With gamma levels lighting up, we could see some wild moves either way. It’s all about being patient and letting the market show its hand once we get the numbers.
Stay sharp this week, traders.
The CPI and PPI reports have the potential to move the needle in a big way, and as always, it’s about finding the right setup at the right time.
I’ll see you in the markets.
Chris Pulver
Chris Pulver Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. The Blue Line That Transformed My Trading
Ever noticed how exhausting it is to constantly chase the next big market move?
It’s like trying to catch lightning in a bottle… Exciting, sure. But rarely profitable in the long run.
Here’s something I’ve learned after years in the trenches…
The market’s biggest moves? They usually happen when we’re not looking.
Overnight, during lunch, or while we’re stuck in traffic.
Don’t believe me? See…
During regular trading hours, the S&P 500 has barely budged. For 24 years…
The blue line shows you the movement during the regular market hours from 9:30 a.m. to 4 p.m. ET.
Sounds crazy, right? But the data doesn’t lie.
What If We Stopped Trying So Hard?
The trades expressed are from historical back teste] data from June 2022 through April 2024 combined with Chris’s live money trading from June 2024 through September 1 2024 to dem@hstrate the potential of the system. The average winning trade during the backtested data was 11.5% while the average losing position was 74.5% per trade and a 90.9% win rate. The average winning trade during the real time data was 10.5% while the average losing position was 29.5% per trade and an 83% win rate.