U.S. stocks fell for a fourth consecutive session today as a fresh spike in crude oil prices and jumping Treasury yields weighed on investor sentiment.
The August Producer Price Index (PPI) report revealed wholesale inflation grew by 0.4% month-over-month and 5.4% year-over-year. The combination of stubborn inflation and triple-digit oil prices (CL=F: $103.9) fueled bets that the FED will raise interest rates next week, with the current probability sitting at 71%.
Adding pressure to the market, the European Central Bank (ECB) raised interest rates by 25 basis points today to control inflation pressures.
Yesterday I noted that the bearish move was unlikely complete for the $S&P 500(.SPX)$ , considering a potential gap fill attempt to 7,667. The Central Daily Level (CDL) for today was also shared so they would help to validate direction, indicating that momentum would be bearish below 7,640.4 and bouncy if that level was recovered. If not, 7,603.9 and 7,583.6 were bearish targets posted last night, and today’s price action indeed moved between those two levels since the CDL was lost.
The decline in the SPX is playing out as anticipated in last week’s Weekly Compass 🎯, currently down 1.6% for the week, while $SPDR Dow Jones Industrial Average ETF Trust(DIA)$ stands as another bearish setup cumulating a 2.5% weekly loss 🎯.
Tomorrow brings CPI news at 8:30 AM New York time. A series of indecisive daily candles for the SPX has shaped the weekly decline, the setup remains bearish, and the move does not look complete. The essential levels to watch tomorrow are detailed in the daily plan below, including the Daily, Weekly and Monthly levels. The daily levels help navigate the weekly ones by providing narrower zones where institutional algorithms have proven to react, they also provide early warnings.
Daily Levels in Action:
Reviewing this week’s four-day price action for the SPX, when it lost the Central Daily Level (every day so far), the price has moved in between the lower levels symmetrically. It is clear how institutional algorithms react to these levels. Premium subscribers receive these lines at market close for the next day, and the price levels for tomorrow are provided below.
The chart shows clearly how once the CDL is lost, the support lines shared in advance act as key lines for institutional algorithms, price action and numbers always tell the true, the chart sows the lines that have framed price action every day.
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