Now that we’ve had some time to digest the CPI and PPI reports, the big question is:
Has anything really changed?
As of this morning, all the S&P Futures has done so far is recover to the 61.8% Fibonacci retracement from the last move down, which started with the big red candle day in September’s first trading session.
Now we’re waiting to see what’s next.
Since this morning, the /ES futures have pushed up through to the 78.6% level, only to be rejected. It now sits about halfway between those two points just below 5590.
Will we see a correction that pushes us back higher, or was that recovery all we’re going to get?
Adding to the mix, the European Central Bank (ECB) cut rates this morning. You may have noticed those rate cuts caused gold to push decisively higher above the 234 level it had been bumping its head on since mid-August.
This could have some traders wondering whether the Fed will follow suit with rate cuts of their own next week.
But for me, the key level to watch is 5570 on the S&P Futures (ES).
If we can close above that level — and with an hour left in the trading day as I write this, it looks likely — there’s a good chance the rally will continue.
Until then, we’re in a bit of a holding pattern.
The Fed’s decision next week is also going to be key in figuring out whether the market has the legs to keep moving higher or if we’re in for more downside.
As always, stay sharp, and keep an eye on those key levels.
— Geof Smith
P.S. If you don’t know the current trends in the oil market… You could be at a serious disadvantage. That’s why I put together this free class!
