Good morning! Here we are, Election Day has passed and we get the CPI report tomorrow. Couple things about the Mid Terms. Generally, the markets like it when Democrats have partial control and Republicans partial control. The expectations are, that the Republicans will win the House. If that happens, that could be a good thing for the markets. At the time of writing, Republicans have 199, Democrats 172 and 64 are undecided for the House. Gotta see how that plays out. Because here's the thing. Let's say the Republicans take the House and the Democrats keep the Senate, the markets might actually like that. And with Big Tech taking a beating after all these earning announcements, they're low enough to bid on and that could push the markets higher. Whoever that dude at Morgan Stanley was last week, saying that we could see 4000 or 4100 in the near term, might actually be right if it plays out this way.
But remember, longer term, we have significant headwinds and this is still a Bear Market. CPI report is accumulative, like a moving average. If you add up all the monthly CPI numbers, it gives you the annualized CPI. It's going to stay high because at the beginning of this year, we were seeing CPI numbers at about 1%. So when we add all these monthly's up, we're going to get a high number. Obviously, over time, this will come down. Which is why expectations are to get to 4% by early Q2 or abouts. So, if the Republicans' don't take the House, and the CPI report is hot. What does that mean for the markets? Well, we could head back down starting tomorrow or Friday. Either way, these are two possible outcomes that could play out.
Plan for the Day: We're technically still in No Man's Land but with a slightly more Bullish lean right now. IF I decide to chase this up to 4000, or 4100, I will do so cautiously and wait for an exhausting point in the rally. We might just hang out here at 3800 today until all the results come in and then tomorrow we could see the true direction. I'll sit on my hands again and just watch the market. Be patient, stay disciplined and trade the market in front of you. Happy Trading!
But remember, longer term, we have significant headwinds and this is still a Bear Market. CPI report is accumulative, like a moving average. If you add up all the monthly CPI numbers, it gives you the annualized CPI. It's going to stay high because at the beginning of this year, we were seeing CPI numbers at about 1%. So when we add all these monthly's up, we're going to get a high number. Obviously, over time, this will come down. Which is why expectations are to get to 4% by early Q2 or abouts. So, if the Republicans' don't take the House, and the CPI report is hot. What does that mean for the markets? Well, we could head back down starting tomorrow or Friday. Either way, these are two possible outcomes that could play out.
Plan for the Day: We're technically still in No Man's Land but with a slightly more Bullish lean right now. IF I decide to chase this up to 4000, or 4100, I will do so cautiously and wait for an exhausting point in the rally. We might just hang out here at 3800 today until all the results come in and then tomorrow we could see the true direction. I'll sit on my hands again and just watch the market. Be patient, stay disciplined and trade the market in front of you. Happy Trading!
Comment:
Futures jump up 3%. I'll cautiously follow this up to 4000-4100.