4/8 Daily Market Note: OrderFlow Data Ahead of Inflation CPI this week
OrderFlow Data Below
Hi Everyone -
I’m going to share some OrderFlow data below for Members on the S&P 500 and Nasdaq-100 to have more positioning data to consider as we gear up inflation data later this week.
On an intraday basis, our bias this morning was the following from our Pre-Market note (I’ll share the excerpt here on Key Levels).
A defensive bullish reaction could take place around 18250 for NQ (Nasdaq-100).
We saw a deep sell into this area shortly after the opening bell and then bounced about +120 points from this area, making it a powerful reference point for intraday players.
We can see below that 18250 was a helpful line-in-the-sand reference for those looking to find bullish scalps this morning (as of this post).
While my intraday guidance has been powerful for those who understand the intraday realm, some of my recent longer-term ideas are facing more resistance - Apple, Costco, and Lululemon - as the broad market begins to cool off from higher-timeframes. I still keep the faith in them, but recognize that the volatility may make Call Options more challenging than direct share ownership. I feel rather good that conservatively* sized direct share ownership in these 3 companies will work out favorably (at least a +5-7% bump from here) before year end. I am Holding longer-dated Calls/Direct on these names.
In geopolitical news, Janet Yellen visited China over the weekend. I will offer a brief summary and also my own conclusion.
Summary of Janet Yellen China Trip:
Yellen discussed her concerns that China is flooding the world with inexpensive exports
Brought up that there may be potential sanctions on China banks if there is increased support for Russia’s military.
Suggested that China lower its National average personal savings rate to boost the economy
Discussed that educational costs should be lowered to increase accessibility
Overall, I think the Yellen meeting does not materially change the U.S.-China relationship but it does add to my thinking that China ADRs that deal with import/exports may be subdued until there is a more constructive tone.
While I think Yellen’s China visit does not deteriorate the U.S.-China relationship, it does create an additional source of uncertainty because she did mention that further tariffs or sanctions are possible.
We can see below from the auction of the Hang Seng’s reaction post Yellen meeting that the initial enthusiasm (1% advance) was reversed, but declines failed to gain traction. This suggests to me that the Chinese market continues to look for stimulus news as the primary catalyst for its next move.
More Stimulus = China Pump (when it comes)
Below, I share some Orderflow Data on the S&P 500 and Nasdaq-100 to show positioning ahead of key macro inflation data this week.
Also - a rather important opinion on Bonds and what it means for the trading environment if yields get past certain levels is also discussed.