CPI Aftermath: Achieve an +88% Win Rate with Just 3 Trades in 2 hours
1. In the past 24 hours, we’ve completed 7 + (1 Bonus) trades, achieving a +12% ROI.
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3. In our last session, we were Mavericks on a mission, getting in and out with +35 points on the S&P 500.
According to the Federal Reserve Bank of Cleveland’s nowcasting, the CPI for August 2024 is projected to increase by 2.74% year-over-year, with core CPI (excluding food and energy) expected to rise by 3.38%. This moderation aligns with recent data showing a decline in inflationary pressures over the summer months.
Stock Market Projections Based on CPI Data
The stock market’s reaction to the CPI data will largely depend on how the actual figures compare to these expectations. Here are some potential scenarios and their implications for the stock market:
Scenario 1: CPI Matches or is Lower than Expectations
• Impact: If the CPI data comes in at or below the expected 2.74% increase, it would likely be interpreted as a sign that inflation is under control.
• Market Reaction: This could bolster investor confidence that the Federal Reserve might ease monetary policy sooner rather than later, potentially leading to a rally in the stock market. Small-cap and value stocks, which have already begun to outperform, could see further gains as investors seek undervalued opportunities.
Scenario 2: CPI Exceeds Expectations
• Impact: If the CPI data exceeds expectations, indicating higher inflation, it could raise concerns about the Federal Reserve needing to maintain or even increase interest rates to combat inflation.
• Market Reaction: This could lead to a sell-off, particularly in interest-sensitive sectors like technology and consumer discretionary. However, sectors like energy and real estate, which are currently undervalued, might still attract some investor interest.
Having said all that we already know how the market will react.