2023/05/08 (225.088) Technical Analysis

DOW Future Price Action Barely Up/Down Today
– Ahead Of US Inflation Data This Week, On Wednesday

So Let’s Take First A Look At The Price Action, Not Only On The US Wall Street In New York
– But Rather Also In Chicago, Where The USD Index Is Traded And/Or As Well The US Yield Curve

US Stocks Little Changed Ahead Of Inflation
US stocks struggled for a clear direction after Friday’s rally as the Dow Jones closed more than 50 points lower on Monday, while the S&P 500 finished marginally higher and the Nasdaq edged up nearly 0.2%. Regional banks booked gains, as shares of Republic First Bancorp finished 9% higher while PacWest added 3.6% after gaining 29% during the session as the lender reduced its quarterly dividend. The energy sector was also in the green as oil prices surged. Meanwhile, investors are awaiting the US inflation report on Wednesday for more insights into price pressures and the monetary policy outlook. On the corporate front, although the earnings season is nearing its end, companies such as Disney and PayPal are still due to report quarterly results this week.

US 10-Year Treasury Yield Rebounds
The yield on the US 10-year Treasury note has risen to 3.51% as investors look ahead to the US inflation report on Wednesday. The payrolls report for April showed a larger-than-expected job gain and rising wage inflation, which has tempered fears of a recession and made it more difficult for the Federal Reserve to justify cutting interest rates. Meanwhile, investors experienced temporary relief from the regional banking turmoil, but they will be closely watching the release of the Loan Officer Survey for clues on how the recent turmoil has affected lending.

Dollar Remains Under Pressure
The dollar index slipped toward 101 on Monday, extending last week’s decline as the Federal Reserve hinted at the end of its aggressive tightening cycle. On Wednesday, the Fed delivered a widely expected 25 basis point rate hike but removed the “anticipation” of further rate increases from its policy statement. However, Fed Chair Jerome Powell clarified that the committee is not currently advocating for rate cuts based on their inflation outlook. The April jobs report released Friday also showed the US economy unexpectedly added 253K jobs in April, well above forecasts of 180K, while wages grew the most in 9 months. Investors now look ahead to US consumer inflation data on Wednesday and producer inflation data on Thursday, as well as bank lending figures to guide the economic and monetary policy outlook.

Two Separate US Economic Data Releases Also Had More And/Or Less Impact On The Price Action Today In New York And/Or Chicago
– But Certainly Not Like Wednesday’s Upcoming US Inflation Data! I Don’t Want To Fool Yyou. Nevertheless, I Don`t Want To Ignore This News Also

US Short-Term Inflation Expectations Decline
Inflation expectations for the one-year horizon in the United States fell to 4.4 percent in April 2023 from the previous month’s 4.7 percent. This decrease was attributed to a softer perceived increase in costs for both college education (7.8 percent vs. 8.9 percent in March) and food (5.8 percent vs. 5.9 percent). However, expected price changes for gas increased (5.1 percent vs. 4.6 percent). Inflation expectations remained unchanged for the cost of medical care (9.3 percent) and rent (9.2 percent). Meanwhile, inflation expectations for the three- and five-year horizons increased by 0.1 percentage point to 2.9 percent and 2.6 percent, respectively.

US Wholesale Inventories Unchanged For 2nd Month
US wholesale inventories remained unchanged for the second consecutive month in March 2023, according to revised data, which is lower than the initial estimate of 0.1 percent growth. The data showed that stocks of durable goods were stagnant compared to the previous month, as the increase in inventories of automotive (1.5 percent vs 2.0 percent) and machinery (1.1 percent vs 0.8 percent) were offset by declines in stocks of electrical (-0.9 percent vs 2.1 percent), hardware (-0.4 percent vs 0.4 percent), and professional equipment (-0.1 percent vs -0.2 percent), among others. Meanwhile, inventories of non-durable goods fell by 0.2 percent (vs -0.7 percent in February), mainly due to the decline in stocks of petroleum (-3.6 percent vs -4.3 percent), farm products (-1.9 percent vs -3.6 percent), and groceries (-0.3 percent vs 1.0 percent). On a yearly basis, wholesale inventories rose by 9.1 percent in March.

Last Week I Wrote For You, Yes Escpecially Yo, My Basic Technical Scenario
– The Short-Term Bullish Trend Vs. The Nedium-Term Bearish Trend To Break The GAP
– So That You Can Trade The DOW JONES Future Highly Professionally Too, If You Want It,
But This Week I Would Like To Go Better, Because I Noticed A New Technical Constellation Today

Once again; here my detail overview reminder. The last bullish short-term GAP from August 2022 must be defended by us bulls, in the Dow Jones Industrial Average Index. Because a price action below would manifests a mod-term failed breakout-formation in retroperspect. At this point, the us inflation was at its peak. Which of course we didn’t know at the time. And why the Dow Jones Industrial Average Index, after the high of the breakout at 34281.36 points on 08th August 2023, fall back until on October 13th 2022, and traded new lows at 28660.94 points.

In November 2022, the Dow Jones Industrial Average Index was then traded above the GAPS again for the first time.
33130.63 (daily low of 08/10/2022) and/or 32877.53 (daily high of 08/09/2022) – more precisely on 10/11/2022. And while this GAP was defended in December 2022, January 2023 and/or February 2023, investors and/or traders traded the Dow Jones Industrial Average Index below it again for the first time in March 2023. So, from a technical analysis point of view, a short-term technical reversal pattern formed. And that´s why I formulated even this long Technical Analysis 4XSetUp for the DOW JONES Future, by the way I even formulated it. Because the fight of the bulls and/or bears for the price action between 33130.63 points & 32877.53 is something like a front line for me. Because the short-term bullish trend reversal formation, below the GAPS, from March 2023 is opposed by a medium-term bearish trend reversal formation, just since November 2022. This is the technical picture that I currently perceive in the Dow Jones Industrial Average Index. And that’s why I pay attention to the lower price action brands around 32948.93 points, 32812.33 points, 32573.43 points and or also 32500.73 points. Which are below the GAPS. In retrospect, however, it was something like low prices, what you can see in the daily charts, with the help of the pivot points. These brands must be defended. At which level we more or less entered our long 4XSetUp in the DOW JONES Future.

And now I would like to bring the trading date of Tuesday, December 13, 2022 into play today.
Because the US consumer prices were also published on this trading day. And with 7.1% they were not only better than in the previous month with 7.3% but also better than expected with 7.3%. Which just proves to me that US WallStreet, particularly the DOW Jones Industrial Average Index, trades primarily, not the US inflation map. Because the spread between US inflation and/or the US key interest rate is now lower than it has been since the outbreak of US inflation; since the outbreak of Russia’s war of aggression against Ukraine, since Joe Biden’s inauguration in the White House. And this despite the fact that volatility is one of the highest on average on the day US inflation is published. Okay, most colleagues argue that the US yield curve is going crazy; which I do not fundamentally disagree with – but currently (today) cannot prove any signs of an imminent US recession. Because the last US economic growth accelerated to 1.6 percent year-on-year during the first quarter of 2023, up from 0.9 percent in the previous period, a preliminary estimate showed. Which is more due to bad sentiment in the US; because the self-inflicted and politically desired green US inflation is biting into the wallet of every single US American. Like here in Europe, especially in Germany (because of the green inflation) also, so that we buy less and less for the same amount.

And that`s why I assume today that the probability that the US inflation figures will surprise us more positively than negatively is currently greater.
And assume that the DOW JONES Industrial Average Index will continue to rise.