Ep 183: CPI, Oil Surge, & Stock Market Charts

May 10th, 2018

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I this episode, we are going to cover:

  • Some of the recent rises that's happening in the marketplace
  • Some of the causes
  • a little bit about the oil price surge
  • look at CPI that's set to come out at 8:30 in the morning

I'll show you some insights to some of the news headlines, and then we'll also take a quick look at a few charts.

For more detailed analysis, take a look at the https://tradersfly.com/

The first things I want to look at is CPI

It is set to come out right around 8:30 Eastern Time.

Now, this may give some fuel, as they say, to the Fed who want faster rate hikes. Because if CPI continues to climb, they're always talking about 2% inflation target.

When you look at the Fed, they're always talking about 2%.

If we go above 2% a little bit and we go with the Consumer Price Index a little bit above 2%, what happens is the Fed would say that it's okay if it goes a little bit above 2% because we've had some things that were under 2%.

You can see how this cause-and-effect, this wishy-washy stance, really starts to play out in a sense of we can justify it any way we want.

As things go a little bit against them, the government administrations will typically readjust the wording in the phrases.

In the past, they've always been looking at 2%. If it's a little high, they'll try to slow it down by rising rates, raising interest rates and so on. If it's a little bit below, they'll speed it up by reducing interest rates.

But the thing is now the way they justify it is by saying if we go above 2%/2.5%, that it's okay because we've been a little under it in the past too.

In an average, as we look at things again, that we'll still be okay.

It's just a way to just words and phrases. It's like saying I have these two colors of orange, which one looks more orange to you? Is it this one or this one? Or if you look at the tones of shades of red or orange or, in that bracket RGB, which one's redder? More orange?

What does 2% mean? Are they substantial on that 2%? This is kind of the issue that happens with all these government things.

Some of the recent run-ups that we've had here in the market are SP-500 bouncing from 2600 level was the key. We had some severe bounces at this price point and going too quick too fast, at least for the short term.

Maybe it's okay for the longer term, but oil price. And if you haven't noticed at the pump, the price you're paying is probably higher now. You might be saying, hey it's great I'm making more money in the market, but you're paying more also at the pump.

This is what happens; some things are positive while other things are harmful. You're making more in the marketplace maybe through investments especially if you're a bullish longer-term investor, but you're paying more at the pump. This is also what contributes to inflation.

So inflation, as it continues to accelerate, the prices in the stock market also continue to go higher because you're inflating things. But you're going to be paying more; 20% more for Amazon,15/20% more for our McDonald's, 10/15% more for Chipotle and anywhere else you know the same thing because sugar prices go up, meat prices go up, and that's typically what happens in the same thing here as we get surging oil prices.

The market rallied on this kind of news in context.

Keep in mind that you have to watch this 10-year yield at 3%

As this starts hitting to 3% and goes above it, some people get a little bit more scared. They'll put a bit more money into the bond yields instead of the stocks.

This is one of the things to watch, and it's one of the things that freak people out.

Be very careful there at this level. We are one-day kind of into the big bouncing brake.

Basically, to simplify things you're paying more for things in the real world. In the stock market, if it continues going higher and it continues to rise, that's also inflation. But overall, you're paying more everywhere else.

Let's take a look at the SP 500. I've been talking about this for our members for quite a bit.

These three points are the resistance levels, but now we're breaking out beyond that. We've only had one day on that breakout, but we are breaking out past that level which could trigger a longer-term rally.

This 2600/2775 is your key level of support. You're also looking at kind of this moving average on the 200-day. These are all kind of the key, and as you watch this, these are your key support levels.

As far as resistance goes, it is right around 2700 and also some of these peaks just right above that level as well 2820.

Be aware that we are breaking out of trend line. You also want to be a little more cautious to the fact that if we get a very accelerated ramp up, even like this in February, you could get a pretty nasty drop down as you did on early March.

Again, you got a ramp up, and you could get another drop. The faster it moves up, the more trouble it could get into.

For more detailed charts, visit https://tradersfly.com/

Author: Jorge Diaz

I'm Sasha, an educational entrepreneur and a stock trader. In addition to running my own online businesses, I also enjoy trading stocks and helping the individual investor understand the stock market. Let me share with you some techniques & concepts that I used over the last 10+ years to give you that edge in the market. Learn More

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