2023/05/09 (226.089) Technical Analysis

DOW Future With Hardly Any Price Action Today: „The Calm Before The Storm?“
US Inflation Tomorrow And/Or US Producer Prices The Day After Tomorrow!

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 Edges Lower, Inflation Eyed
The yield on the US 10-year Treasury note decreased slightly to 3.49% on Tuesday, following its peak of 3.52% on Monday, as investors assess the monetary policy outlook and await 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. At the same time, traders are continuously evaluating the health of the banking sector, with the Fed’s Loan Officer Survey illustrating a persistent tightening of lending conditions, primarily due to the impact of the Fed’s monetary policy as opposed to the recent banking turmoil. In the meantime, short-term Treasury yields have increased as the debt-ceiling deadline draws near.

Dollar Edges Higher Ahead of Inflation Data
The dollar index rose toward 101.5 on Tuesday, rising for the second straight session as investors looked ahead to key US inflation reports this week that could influence the Federal Reserve’s next interest rate decision. Data released Monday also showed that credit conditions for US businesses and households continued to tighten at the start of the year, but it was likely caused by the Fed’s aggressive rate hikes rather than the recent banking turmoil. Meanwhile, the 12-month inflation outlook for the US declined to 4.4% in April from 4.7% in March. Last week, the Fed delivered a widely expected 25 basis point rate hike but opened the door for a possible end to its aggressive tightening cycle. Investors now look ahead to US consumer inflation data on Wednesday and producer inflation data on Thursday to guide the 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 Small Business Optimism Lowest Since 2013The NFIB Small Business Optimism Index in the United States fell to 89 in April of 2023, the lowest since January of 2013, from 90.1 in March, and compared to forecasts of 89.6. Labor quality was the top business problem as more owners struggle with finding qualified workers for their open positions. Inflation was the second top problem but is showing signs of easing. The share of owners expecting better business conditions over the next six months fell two points to a net negative 49%. A net negative 19% expected higher inflation-adjusted sales, down four points from March. At the same time, 45% of owners reported job openings that they could not fill, up 2 points from March. A net negative 5% of owners viewed current inventory stocks as “too low” in April, down six points from March. This suggests stocks are now too large relative to expected sales.

US Economic Optimism Index Unexpectedly Falls
The IBD/TIPP Economic Optimism Index dropped 5.8 points to 41.6 in May 2023, the lowest level since November and significantly below market expectations of 48.2. The latest reading was also lower than April’s 16-month high of 47.4 and has been pessimistic for the past 21 months. The outlook for the US economy for the next six months declined by 7 points to 34.6, the worst level since November, while the subindex measuring personal finances decreased by 5.2 points to 50.1, the lowest since January. The support for federal economic policies gauge also plummeted by 5.3 points to 40, the lowest since November.

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. 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. Which is also proven by today’s US NFIB Business Optimism Index. The NFIB Small Business Optimism Index in the United States fell to 89 in April of 2023, the lowest since January of 2013, from 90.1 in March, and compared to forecasts of 89.6. Labor quality was the top business problem as more owners struggled with finding qualified workers for their open positions. Inflation was the second top problem but is showing signs of easing.

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.