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Markets are eagerly awaiting the release of the Consumer Price Index (CPI) on Wednesday, which is expected to indicate a 5.2% year-over-year increase for March, down from February’s 6% gain. The stock market was relatively steady on Monday after last week’s employment report, which showed a cooling off of the economy, with the U.S. adding 236,000 jobs in March. Wage growth also slowed to 4.2% year-over-year. These indicators suggest that inflation may continue to decline, which could lead the Federal Reserve to hold off on another interest rate increase at its next meeting in May.
Investors are closely watching the CPI, as it is a key economic indicator that will impact the Fed’s decision on interest rates. The decline in inflation needs to be more than minor for the markets to anticipate a rate-hike pause, which is the ultimate goal. The Fed is currently focused on tamping down inflation by reducing economic demand through interest rate hikes With this in mind, are pricing in a high probability that the Fed will increase rates by a quarter-percentage point. The Fed raised rates by a quarter-point at its March meeting, opting for caution rather than a half-point increase. The expectation of another interest rate hike is pushing the 10-year Treasury yield up to just over 3.4%.
The $JPM, $DAL, and $UNH earnings this week—as well as CPI/PPI data—can influence the next move in the market. The $VIX is trading near the $20 level. We are watching the overhead resistance levels in the SPY, which are presently at $412 and then $418. The $SPY support is at $406 and then $402. We expect the market to trade sideways for the next two to eight weeks. We would be market neutral at this time and encourage subscribers to hedge their positions. Globally, Asian markets finished with mixed results while European markets closed in the green. Market commentary readers should maintain clearly defined stop levels for all positions. For reference, the SPY Seasonal Chart is shown below:
Note: The Vector column calculates the change of the Forecasted Average Price for the next trading session relative to the average of actual prices for the last trading session. The column shows the expected average price movement “Up or Down”, in percent. Trend traders should trade along the predicted direction of the Vector. The higher the value of the Vector the higher its momentum.
*Please note: At the time of publication Vlad Karpel does have a position in the featured symbol, unh. Our featured symbol is part of your free subscription service. It is not included in any paid Tradespoon subscription service. Vlad Karpel only trades his money in paid subscription services. If you are a paid subscriber, please review your Premium Member Picks, ActiveTrader, or MonthlyTrader recommendations. If you are interested in receiving Vlad’s picks, please click here.
West Texas Intermediate for Crude Oil delivery (CL.1) is priced at $79.91 per barrel, down 0.98%, at the time of publication.
Looking at USO, a crude oil tracker, our 10-day prediction model shows mixed signals. The fund is trading at $70.24 at the time of publication. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
The price for the Gold Continuous Contract (GC00) is down 0.98% at $2006.60 at the time of publication.
Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows mixed signals. The gold proxy is trading at $187.83 at the time of publication. Vector signals show -0.14% for today. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
The yield on the 10-year Treasury note is UP at 3.417% at the time of publication.
The yield on the 30-year Treasury note is UP at 3.631% at the time of publication.
Using the iShares 20+ Year Treasury Bond ETF (TLT) as a proxy for bond prices in our Stock Forecast Tool, we see mixed signals in our 10-day prediction window. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
The CBOE Volatility Index (^VIX) is $19.08 at the time of publication, and our 10-day prediction window shows mixed signals. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
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