CPI Inflation Data Inks Fed Rate Hike, Oil Drops, Yields Stall, Markets Bounce. Here s The Top Trade

My name is Gareth Soloway and I was a losing trader until I mastered technical analysis. Logic and charts beat hype and narratives every time. Now I teach investors the same techniques that made me a multi-millionaire. This is my trading game plan. Good morning everybody, happy Friday. My name is Gareth Soloway, Chief Market Strategist here at VerifiedInvesting.com. So the CPI data has just hit 30 minutes ago. It came in fractionally hotter than expected. In fact, let's take a look at the numbers right here. Now the first thing you'll see is year over year in line with estimates at 3.4 percent. Core in line, that's year over year in line at 2.4 percent. CPI month over month was in line at 0.4 percent, but core CPI slightly hotter at 0.3 percent versus the 0.2 percent expected. So those are the numbers on CPI. What does that tell us? It tells us basically the Fed's going to hike next week. Now the markets are not super upset. This is something that they've already been pricing in by yields going up. And the market, I think, thinks it's won and done for the rate hike. And again, what we're seeing here is oil is dropping. Oil has been dropping overnight. That's bringing the 10 year yield in, which is spiking the S&P futures. Now take a look at this, guys. We just talked about how the Fed is likely to hike rates next week when it's on Wednesday at 2 p.m. Remember when I did the game plan yesterday, there was an over 60 percent chance we were going to be seeing. In fact, it was close to 70 percent chance we would see a rate hike next week. All right. Now, that was after the PPI data, which is producer price index. Look at what it is now. Based on all the metrics, we are looking at an 86.7 percent chance the Fed will hike rates next next week. That is essentially a lock. Like I don't think anything will happen in the next four trading days today, Monday, Tuesday into Wednesday, where anything will change at this point. The market's expected. And if the market's expected, the Fed will deliver it. The Fed does not want to shake the ground here. Even if the president rage tweets about it, it looks like the Fed will be raising rates next week. Now, again, you might say, well, isn't the stock market getting pummeled on this? Actually, no. Take a look at this, guys. The S&P futures were already trending up on the back of this data, and we are seeing a surge to the upside even further. The S&P futures right now are up one percent. That is negating yesterday's drop and then some. So we are seeing a very substantial bid in the S&P futures. Now, if you've been following along, what's been my S&P bias? Have we been above the bullish line or below? Yesterday, we tested it, but we stayed above the S&P 500 bullish level trend line. OK, now, the reason I bring this to your attention is because yesterday and I even told you guys this in the game plan yesterday morning, I said I am going to be doing some buying of stocks today. And I did that yesterday. Absolutely. All right. If you're a member of the portfolio, which you view literally, you see the live portfolio. If you are a member and you see how much we're up for the year, I did buying yesterday and today it's having a beautiful initial jump in value. Here it is. So here's the chart. This is the levels I've shown you. We have our bullish bias. As long as we held this trend line, I said maintain a bullish bias. I even said we could be making a bull flag on the S&P. Look at that. Look, I mean, this is absolutely gorgeous, right? High pivot, high pivot to high pivot, low pivot, low pivot to low pivot. So you have this perfect descending channel that came right into major technical support. And it was the bullish bias trend line. So if we had broken that, that would have been a different story. But sure enough, we held it. And today we're looking at a 1% rally in the S&P 500. And by the way, folks, just a little bit of a data point here. And again, it is September 11th. And we'll all we of course, we all remember September 11th, 2001. I was at Binghamton University in New York when the Twin Towers were struck. I remember watching it live on TV. And I remember I couldn't even get home to my family because I have to go basically you had to go through the city on the bridges. And it was all shut down for a long, long time. But if you look at every day, every September 11th since 2001, there's only been two down days in general. September 11th is an update per the data. And it looks like we're on pace for another one today. And you might say, why is that? Is it institutional? You know, there may be a bias for institutions to want to or at least the government to prop up the markets on a day like today. Generally, it's a good thing. You want people to have that positive feeling on a day like today, since it was such a horrific day. But I think also it has to do with the resilience, right? People and human nature is to come out of these scenarios with strength, with belief in their country. And what do you do? You buy stocks on days like today. All right. So let's go back to the charts here. So we have a bullish bias maintained right now. We're getting a bid up in the pre-market. The dollar today is coming in just a little bit. This is the bigger story. Look at the 10-year yield. The 10-year yield is falling, going to the daily chart. Beautiful red candle. And this, my friends, is on the back of this oil. Oil is below ninety nine dollars a barrel. And I told you guys yesterday, I said, listen, and what's amazing and I love about this is you guys can go to yesterday's video and always fact check me. What did I say yesterday? It's right there in the video. I said, look at one hundred and four dollars per barrel. That is your next technical level. Now, yesterday, after the stock market closed, oil spiked up after hours. Where did it go? Let's take a look. Where did it go? Right here. One hundred and four dollars a barrel. This pivot point right here. There it is. Look at the drop on crude oil from that point. So crude oil down five percent today, below ninety nine dollars a barrel. And again, beautiful pullback here as we'll see how low this can go. I'm expecting a pullback on crude to ninety two fifty, not necessarily today, but by early next week, we should be back to ninety two fifty. Then that will be a technical support. Notice here it was technical high pivot and then you hit it here. Bounce, bounce, tried to get through, couldn't and then finally broke out and went to the upside. So therefore, this now should be technical support. All right. So that's where we are on this front of crude oil. Beautiful drop again, trading below ninety nine dollars a barrel. Yields are coming in. PPI data was fractionally hotter on the monthly core number. But again, the market seems to have accepted a rate hike next week. At least we know now that we're going to get a rate hike and that's the next big factor next week. Now, what's going to be interesting is what Kevin Warsh, the Fed chair, says when or after they hike rates in his press conference. Is he going to say, hey, we're going to do more? That's where we're going to get more movement in the markets, right? That's where things will change. OK, but I think a lot of the upside recently in the yields is directly related to what a massive move oil has had. And just to put it in perspective, if we go back to the chart from this low, which was about one month ago, we've gone up about 40 percent in oil from low to high. Here we've gone up about 30 percent. So that's the last two weeks, 30 percent move. So needless to say, think about the inflationary pressures. I mean, you have diesel fuel, which is currently now at all time highs above six dollars a gallon. Incredible. Now, if that can mitigate, that will be very helpful to the inflation picture going forward. All right. So we've covered all the major things here. We'll get to gold. We'll get to silver. We'll get to natural gas. Before we do that, let's talk about earnings. Oracle reported yesterday after the bell, the Oracle numbers were very, very good. The stock really, though, is only getting back a little more than what it lost yesterday. So this was the previous close before yesterday. This was the drop yesterday. And where we're trading is just a little bit above that. Now, in terms of a trading level today, when we're not really at a recent high or low, it makes it very hard as a day trader. I'm going to continue to watch some key levels. So just in case it really rallies to the upside today, this one seventy nine level will be on my radar. It would have to rally about fifteen dollars higher than where it currently is, which would be another 10 percent. I think that's somewhat unlikely considering the price action in the free market. But again, if it does push up there, I would be a buyer. If it sells off for some reason today, one thirty nine to one forty would be short term technical support. All right. Adobe reported earnings here. Check this out. The stock is down, although catching a little bit of a bid pre market. But again, here you have a stock that fell into earnings. It's down more. Check out this trend line. Major trend line price broke out. So what do we know about trend lines that break out? What is price generally like to do? It likes to go back to the scene of the crime. The scene of the crime means a retrace to that level, which had acted as a major resistance, but now will act as support. And so, again, even as a swing trade, I'm not even looking at this as a day trade. I'm looking at this as a swing trade. If it pulls back to that trend line, I will be a buyer on a swing trade basis. So just to recapture in visual form resistance, resistance, resistance, breakout, retrace support right there. That's around 220. It's still about twenty dollars lower. But if we do come in there the next week or two, I love that level as an opportunity to go long on Adobe. R.H. reported earnings, the stock initially popping sharply, but coming back in only fractionally higher on the day. So really makes it pretty tricky to day trade it again, maybe if it gets down to about 119 to 118, vice versa. There's a gap up here at 170. I don't really have a good day trading level on this one. Now, one chart and I'm getting more and more bullish on this chart on a swing trade basis. We just talked about the retrace to the crime, right? Well, did you guys look at K-Web, which is the Internet Internet China ETF? Take a look. Here it is. This is an exact example of what I said that could happen to Adobe, but it's already happened to K-Web here. And again, I am an intrigued buyer of K-Web. Resistance, resistance, all of these resistance points, price breaks out, retraces and look at where it went yesterday, right into this level, getting a small bounce today. But again, good technical support here at 2450. So I like this one as a swing trade as well. We'll see where it goes. Gold today was teasing a breakdown of the head and shoulders pattern. It's so far is getting rescued today as yields are coming in and the dollar is coming in. Gold is catching a bid. Good save here. And I said yesterday, I said, listen, this level, if you're a bull on gold in the near term and listen, I'm a I'm a bull long term because I'm a bull long term. I don't really care if it breaks these levels because it's a short term move. But if you're more of a short term trader on gold, this is a huge level. Right. But I said, you've got to the bulls have to hold the line here right now. They are. Absolutely, they are. We'll have to watch and see if it continues. So right now, good bounce on gold. We'll continue to watch that silver. Same thing. You have your head and shoulders pattern. It tried to break the neckline. It held and is now catching a bid. But watch this trend line in the coming days. Does it end up breaking? If it does downside to about fifty five an ounce, if it breaks, if it doesn't break, I would expect another retrace up here to resistance around 70, 71 and maybe a breakout even higher. So this line is really a major line in the sand. Natural gas yesterday fell sharply, then recovered and went green. Today it's down again. Notice how it's now struggling to get back above this pivot line. So remember, this is your neutral zone on natural gas. We are in the neutral zone. If it gets back above here, it flips back to bullish. If it gets below this trend line, it flips to bearish. But right now, kind of more of a neutral bias after the unfortunate break back below this trend line on natural gas. Next up, guys, let's take a look. We have Coinbase Coinbase. Oh, excuse me. I should say Bitcoin traded on Coinbase here. This is the Coinbase chart on that platform. But it is a Bitcoin and Bitcoin getting a bid today off of this technical level. You can see, again, seems to come down, hit, come down, hit, come down, hit very clear zone here around seventy six thousand that we'll have to watch in the future. And again, really, if you're looking at Bitcoin, as long as it holds this general vicinity right along here, then to me, this looks possibly like a bull flag for an eventual breakout. Now, if it breaks this, that's problematic. But just like gold and silver, you could be bullish as long as the trend line holds on all of those inclusive of Bitcoin here. It still looks generally positive. So, again, very interesting to see how everything continues out. I will keep you guys, as always, in the loop. One more check on yields coming down to about four point nine to two percent. If we look at oil today, oil now back just fractionally above ninety nine dollars a barrel. We'll see where that goes. And the S&P futures heading into the open, getting a beautiful daily bounce. Look at this nice day today. We're up about one percent on the S&P 500. Now, folks, I'll be back today at four twenty for your live market reaction summary to everything today. It's called the weekly wrap up. It's my Friday show at four twenty p.m. I'll be back. And don't forget, usually today we do crypto combat at one thirty p.m., which is a fun show. But today we're doing a special Bitcoin revealed episode by Nick, our chief market or chief crypto strategist. So tune in at one thirty today for that live show should be fantastic. And I'll see you all at four twenty today for a weekly wrap up of the markets. You guys have a great one. Talk to you soon. Take care.