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Another important macro event is coming out this Wednesday (12 April) - March CPI numbers, this number could really ignite the market for another upward push or it could flush SPY back down to under $400.

I would look out for this number particular to set up some really good trades this week (especially Thursday and Friday).

Outlook for CPI (Consumer Price Index) data for March

Many has hopped the U.S. inflation to fall faster, but it does not seem to be the case.

When we see CPI data on 12 April, it might suggest that March’s inflation data may show an improving outlook with estimated inflation running at a little over a 5% annual rate and an estimated month-on-month rise in prices of 0.3%.

However, we should be more concerned on core inflation which run at an estimated 0.45% month-on-month once we take out food and energy.

The reason why we take out energy because energy costs are expected to have fallen in the March report generally, this help bring inflation down in the headline numbers.

Cost of Housing

It would be important to look at the cost of housing as these costs carry quite a significant weight in the inflation calculation.

Housing costs has rose over 8% year-on-year in the CPI February’s report. That is enough to move the aggregate U.S. inflation number significantly.

Though industry data has suggest that home pricing will ultimately moderate strongly. But we have not see it reflected in the CPI data due to the lags in statistical calculation of the housing costs.

Question of when and if housing costs turn that might be sufficient to bring inflation much closer to the Fed’s 2% goal.

However, I believe it is still unclear when we will start to see that trend in the data. In past few months, housing costs have shown no sign of cooling in the CPI releases.

How Fed will to March CPI data

The FED will only meet on 03 May to set the interest rates, so March CPI might not give us a decisive view on FED’s view on their rate hike campaign.

I believe there are more data to appear and be assessed before the Fed meet again to set the rate or decide to pause rate hike.

What happen if Inflation remains Strong MoM

What would probably let Fed to consider a 25 basis point hike in May is inflation still remains strong month-on-month.

However, looking at the chances presented by the fixed income markets it seems like there is around 60% chance that Fed may decide to stay put the current rates (e.g. no rate hike first).

Why the market think a rate hike halt is possible in May temporarily

• I believe considering that interest rates are already relatively high. Fed may need to wait to see the effect on inflation reduction due to high interest rates, rather than further go for another interest rate hike.

• Signs are showing that certain parts of the economy are weakening, people are still concerned about the housing market. The strong jobs market from past data might start to change with the recent data coming up.

Fed might consider other economic risk beyond inflation before deciding aggressive rate hike.

Fed’s stand and next course of action

The upcoming CPI data might show that Fed still have more work to do to fight inflation even though inflation has fallen from peak levels.

But Fed may consider holding rates at high levels, rather than raise rates to achieve their goal.

There might be other economic risks surfacing which might force the Fed to make more of a trade-off between inflation and economic growth over the coming months. This is a tough call of action.

The Fed has spoken of its desire to continue the inflation fight as long as needed, but markets believe the Fed may be forced to cut interest rates far earlier than current Fed projections might show.

No matter what, I believe the inflation data for March is likely to show that inflation remains a concern.

Stock Watchlist for Week 15

I would look at $SoundHound AI Inc(SOUN)$ , volume would be important to trigger a bounce up the key level ($2.60). If the key level can hold through most of the session, a gap up to $2.80 to $3.30 would be possible too.

But if it is under $2.40, I would not plan for a long position as it will gap down likely to $2.00 to $2.20.

$Cardlytics Inc.(CDLX)$ if we could see CDLX gap up to $5.50 once market open on Monday, will look out for price and volume action. Looking for bounce if it hold at $5.40 (stop loss).

I would take profit once price goes into $6 to $6.50 level. But do be careful as CDLX once it goes below $5.40, then it will go downward trend to $5 to $5.20.

$Alibaba(BABA)$ I would look at this price range ($101-$102) to enter, but would look out for price and volume confirmation. There would be a good gap up to $103 to $105.

But do monitor the market movement (e.g. indexes). Once price goes below $101, I would not consider to enter BABA.

These 3 stocks are 3 of the many stocks that I would be monitoring for this week watchlist. The result from the A.I. model is not out yet.

I hope to share them once the predicted stocks result is out from the A.I. model.

Appreciate if you could share your thoughts in the comment section on what are your thoughts on trading in a week where CPI data is released, would the 3 stock watchlist be useful.

Do like, share and comment on this article if you find this trading thought useful.

@TigerStars appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.