A1 Trading Company

April 8, 2024

Key Inflation Data Weighs on Investor Sentiment

Frank Cabibi

Wednesday's inflation report in the US will be very pivotal in how USD-related assets will react for the next month. Higher CPI has investors worried of the Fed who still looks to cut rates at some point this year, but the inflationary trend could determine when these rate cuts come.

EdgeFinder Analysis

We have been talking about oil for some time in these articles, but the attention is well deserved. USOil is now a +10 on the EdgeFinder's score, which is a +3 point move from Friday. COT continues to pile money into the commodity although retail is also long.

We saw good PMI numbers last week (both above 50), and now we are waiting for CPI Wednesday. What could help oil prices move higher would be if we get a higher inflation number. Higher CPI usually means higher prices for oil. Core, however, is excluding food and energy. So we should watch to see what CPI m/m/ and y/y come in at.

Bitcoin is another asset to watch amid the latest inflation report in the US. What usually acts as a hedge against the dollar, bitcoin has been on a tear since the start of this year. Now price has broken above the potential head and shoulders pattern that happened in March. It has also broken above a bull flag pattern on the 1D timeframe.

Wednesday's number will also affect bitcoin's price. Higher CPI will not likely be optimistic for the crypto. Forecasts are saying that Core and the m/m rate will come down while CPI year-over-year will be higher. Similar to the US indices, bitcoin likes a weaker dollar and lower interest rates.

Speaking of indices, let's take a look at the NASDAQ on the EdgeFinder. The score changed by a dramatic 6 point move to the upside after unemployment rate and COT data from last Friday. The scores holding this index back are from inflation, interest rates and Services PMI.

To get a stronger bullish reading, investors will need to see a softer inflation number than what we have seen so far this year. An increase is going to likely hurt optimism in the stock market, especially for the tech market.

Retail Spotlight

Retail's top long positions are on the metals and crypto. The small cap index (Russell 2000) is another majority long positions. The top shorted are the US and UK stock index.

Smart Money Spotlight

Smart Money just bought a considerable amount of the SPX500. They are selling dollar and gold too. Oil and bitcoin still remain in a bullish bias from the smart money category. Smart money is also buying 10 year bond notes betting on lower yields.

Fundamental Spotlight

The Interest Rate Breakdown for the US indices shows us where short term rates are compared to its 8-day moving average. When yields fall below the MA, it's usually a good sign that there is increased risk appetite. Right now, yields are above the MA which suggests concerns of higher rates for longer and possibly higher CPI on Wednesday.

A1 Edgefinder

All-In-One Fundamental Dashboard!
Simplify your fundamental analysis with our all-in-one fundamental dashboard! 
Discount code: READER

Learn more

My Crazy Trade On Gold: Up $8000

Hey Traders! This week has been wild for Gold! Thanks to insights from the EdgeFinder, I've been in a trade on XAUUSD since May 3rd. Initially, I jumped in due to weak jobs and PMI data, sticky inflation, and solid support/market structure. Here’s a quick look at my gold trade: Entry Recap: On May 13th, […]

Read More
Is Gold the Buy of 2024?

Rates move lower after the BoE announced their latest monetary policy report to keep rates unchanged at 5.25%. Unemployment came in higher this morning with the 30-year bond auction coming up Thursday afternoon. In the midst of a slow news week in the US, gold is sitting at a very favorable position according to the […]

Read More
Yields Fall Ahead of Earnings

More earnings reports come out this week is causing an inflow of buyers in the equities market while yields begin the week on a decline. Last week's Fed meeting showed up as "less hawkish" than investors expected causing risk appetite to increase at the start of the summer months. EdgeFinder Analysis As we come off […]

Read More
DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here
There is a significant degree of risk involved in trading securities. With respect to foreign exchange trading, there is considerable risk exposure, including but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or currency pair. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you can afford to take the high risk of losing your money.
homesmartphonelaptop-phonemenucross-circle linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram