#11-15 | PPI Incoming, S&P500 Short Squeeze $SPX $SPY $ES_F $QQQ $NQ $DJI

PPI numbers is good, more room to the upside?

From our plan on the S&P500 on Sunday, we identified that the T+2 Range (Friday range) may need to be retested. The LOD is 3964. This Market Generated Infomation tells us that net levered longs defended the T+2 High (3967) and wholesale is spending capital to move inventory higher into the 4057 range.

#11-14 analysis of T+2 Range between 3870-3967

In light of tomorrow's PPI, it is possible that we stay on the low volume side of the market most of the day. In addition to reducing this cycle, the PPI may also be used to get rid of inventory that has been accumulated by multiple vendors and consignees.

While the market has seen an low CPI, it should not be celebrated for too long - the risk-free return on dollars is only 4-5% at present. It is astounding how many people have made a 3 year risk-free return on their investment at 3500-3600, when everyone was losing their minds. That's a 15-20% return.

On the weekly chart, price needs to break above this GREEN CHANNEL on the weekly for more bullish continuation. Bears defending this upper bound will result in a retest in the GREEN RANGE at the lower bound.

Green Channel = Optimal Bullish Reversal | Bulls need to BREAKOUT the Channel

It is important to pay attention to the price reaction if continuation selling takes place. The net long position has been acquired at 3993 zone (GREEN ZONE-see chart below). For the bullish side, net longs are required to defend yesterday's HOD (4017.50); holding this level, we can begin rotating toward 4057.

Green Zone=Cost Basis of Net Longs | Yellow Arrow=Previous Day Low

Compared to October's CPI numbers, October's PPI is in line with the prior month's PPI. This is a good sign for investors as this is the FIRST sign of inflation decreasing.

To reiterate what we discussed on #11-11 (see quote below)

There is still a considerable amount of work to be done until we have three consecutive CPI beats. Fed Chair Powell stated a few months ago that this is not the time for nuanced inflation readings; they are looking for a sustained decline. Inflation must cool for several months before the Fed changes its tone and direction on interest rate hikes. 

zerohedge @zerohedge

PPI: misses across the board again PPI 0.2% M/M, Exp. 0.4% PPI 8.0% M/M, Exp. 8.3% PPI Core 0.2% M/M, Exp. 0.3% PPI Core 6.7% Y/Y, Exp. 7.2%,

Our next move higher should occur after a weekly retest of 3885.75 (9EMA Daily) after PPI is out of the way. PPI print/buy programs, we tapped our "ALGO LEVELS" of 4050.50 during PPI squeeze.

Green Arrow=Top Tic Algo Level @ 4050.50

We'll go into detail about Short Term Levels on #11-16. Today is a good day to take responsive trades, with a smaller size and the intention of not holding them for long periods of time (over ten minutes). 

We need inventory to be built out in this BLUE ZONE below. The key areas to look at for importance are the Previous Day Range & T+2 Range. We can gauge momentum using the 9EMA.