The MARKet Update – 02/17/23

Good afternoon O$ members!

We finally broke out of the sideways range in the Emini futures between ES 4180 and 4100, that we’ve been stuck in for the past 12 days.  We dropped past 4080 and then dropped more to the next level of demand/support at 4060 before bouncing back up to end the day at 4089.

The market is finally paying attention to three bad reports we’ve had in the past two weeks.  First was the FED mtg, where Powell announced that there would be no pivot and high rates would need to hold longer, most likely all year at a minimum.  Then there was the CPI report showing a very small drop in overall prices, coupled with higher retail sales and manufacturing than expected.  Lastly, we had the PPI report yesterday that also came in higher than expected, showing a minimal decrease in inflation.  Despite all the data showing the inflation fight is far from over, the market the past week was behaving very bullishly and could not break below the 4100 level.  Finally, today we broke down and have indications of the bullishness receding for the short-term.

We’ve been holding onto one put we picked up at the beginning of the month that has vacillated between -50% and +115%.  It’s currently down about 15%, but because the market was unable to overtake the key 4100 level again by end of close today, I thought it safe to hold into next week as the market is losing its bullish momentum in the short-term.

We’ll definitely have to keep an eye on the 4080 level next week.  If we bid below it we could revisit that 4060 level again and this time if it breaks could have us fall all the way to 4010 level before finding some support.

The market is closed Monday for Presidents’ Day, so we’ll revisit the levels on Tuesday.