ES Morning Update April 13th 2023

The CPI did give us a little volatility yesterday as we seen a decent squeeze higher but it couldn’t hold it seems. It was an up, down, up and down into the close day, which again is still just chop to me as I’m not a day trader.

I still think that we’ll see 3950-4000 SPX next week, which might happen all in one day… who knows? We do seem to see fast drops happen a lot and most bears miss it. Then it chops several days at the low zone to lure in more shorts before going back up.

But I don’t think we stay down long as after we do some dancing in that area for a few days we should go right back up to this current 4100 area into the May 3rd FOMC meeting. A common move is to top on a Friday the week before the FOMC, which is the end of this month on the 28th. Then hold that area into the following Monday (April 1st) and dip some on Tuesday in front of the meeting.

Of course it’s just traders front running the meeting with some expected outcome from it, but for safety they sell out prior to the meeting and go to cash. This happens over and over and over again. Meaning that any low next week is likely to be followed by another rally back up to this zone into the end of this month.

Then if I’m right we’ll drop again after the meeting into mid-May, which could make the entire move some ABC down from the 4/4 high. I expect the Fed to disappoint traders looking for a pause or pivot. So a pullback should happen afterwards, but after that pullback I suspect traders will be thinking that there will be much higher odds of a pause in the June meeting, so a stronger rally will happen that should take us up near the August high from last year, which is the 4300 area.

Now for the short term, we are close to the rising white trendline and at some point it’s very likely going to break. Whether or not that happens today or tomorrow I just don’t know? Maybe it happens on Monday? Regardless it should break soon and a drop into the 3950-4000 SPX zone is coming next week. Have a blessed day.