One Economic Report Down More to Go

Tom Gentile

Posted in
Technical Analysis

By: Tom Gentile
March 14th, 2023

2 mins read

The CPI Report Came Out This Morning

The reported number came in as expected. The fact it didn’t come in better or worse than expected seemed to give market bulls some confidence to put their money to work.

It was if the mind set is inflation may not be getting better, but at least it isn’t getting any worse.  The market gapped higher, dipped later in the day only to rally into the close.

Figure 1: Economic Reports Due Out the Rest of Week Ending 2023-03-17
Figure 1: Economic Reports Due Out the Rest of Week Ending 2023-03-17 (source)

We are not done with economic reports this week as the follow up to the CPI, the PPI, is due out tomorrow morning.  Thursday we get Initial Jobless Claims data – which could be good for confidence if the jobs market cools a bit, helping the Fed in their fight against inflation – or so they say.

We do not know what will be reported nor the reaction to it, but there is the sense that so long as inflation isn’t getting any worse investors will feel a bit more confident in adding to their holdings.

Technically Speaking on the SPY

 The market gapped up from the prior days close. The Three-day pattern resembles a Morning Star Reversal pattern.  The difference from a prototypical Morning Star to this one is the middle trading day.

Typically, the middle day is a doji day, or small candle body day indicating indecision.  It can be a bullish or bearish day, but a bullish day is favored.

The day in this pattern is a bit larger than what is typical.  It is a bullish candle body day and that could mean things are more apt to reverse to the upside.

The gap up and the fact the day was bullish makes for anticipation for more upside.

Figure 2: 60-Day Japanese Candle Chart SPY
Figure 2: 60-Day Japanese Candle Chart SPY

The key thing about all this dialogue is though technically, we could be reversing higher, we are data dependent – meaning we need the economic reports to come out and lead our view on things improving – we kind of sound like the Federal Reserve in that case, don’t we.

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