Daily Commentary: September 13, 2023

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CPI Is A “Nothing-Burger”

Posted by Peter Stolcers on September 13

The market needs a catalyst to breakout of this trading range. Expect volatility ahead of triple witching.

PRE-OPEN MARKET COMMENTS WEDNESDAY – “Hurry up and wait”. We’ve been working our way through the summer doldrums and the market needs a catalyst. The CPI had the potential to move the needle one way or the other and that does not look likely.

The number came in petty much as expected (.6% increase and core at .3%). We are seeing two-sided movement and that should not come as a surprise. Buyers and sellers have been paired off for the last few months.

The ECB could hike interest rates by 25 basis points tomorrow. The odds are 50:50. This could swing the market slightly. Next week the Fed is expected to pause. The Fed Funds rates are pricing in a 45% chance for a pause in November and December.

The new iPhone did not impact the stock much and those releases tend to be “sell the news” events. Supposedly, China is not banning iPhones for government workers.

My market bias is neutral. This is triple witching so we are likely to see increased activity/volatility just like yesterday. Often, we will get one trend day the week of expiration, but there has to be a catalyst (like the CPI). If we don’t have a catalyst, you can expect more swings like we saw yesterday.

Overseas markets were generally down, but not by much. The S&P 500 is flat after the news and I am expecting choppy two sided action early. Look for long mixed candles, wicks and tails. It is going to take time for buyers and sellers to battle it out. Once a victor emerges, the directional movement will be stubborn. You will see lots of retracement. When that move stalls, the likelihood of a reversal will be pretty high. You will know that because the initial move was not that strong.

So how do you trade this shit? You keep it small and focus on the very best stocks that are breaking through technical levels on heavy volume with tight orderly price action. Keep your trade count down and focus on a few stocks (don’t spread yourself thin). Look for reversals at support and resistance.

Support is at AVWAPQ and resistance is at the 50-day MA.

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