CPI Shrug Off

I didn't open any contracts today, I am happy to not jump abruptly on a FOMO train on a Friday, but let's get down to why.

I'm starting to hit the nail on the head, yesterday I mentioned how the market showed favor towards XLY (discretionary), and today was evidence of it once again. Looking at the chart below with all the US sectors, we see the performance from April 9 - April 10; where XLY outperformed all the sectors with a +1.87% performance.

Now, this was interesting to me, the CPI report showed that inflation is not slowing down, in fact it was reported higher than February's report - source. The market shrugged it off, and it makes sense why. We know that the biggest contributor to the inflation in March was the escalation in the war, which pushed the oil prices exponentially, but with the current ceasefire, investors are taking advantage of it and ignoring the noise.

Now, I did point out that there was a higher ratio for calls for Amazon yesterday, and today also proved this as the price was pushed up more vertically today.

In the above, the highlight is the change in price between yesterday and today, with a $4 change. However, there are reasons why I chose not to jump on Amazon even though I knew it was going to continue to rise.

First, the RSI has been in an overbought position and stayed in overbought the entire day. Secondly, the trading volume was lower than the three previous days, which tells me that the price won't be pushed up, it could be due to the weekend, though we can expect a retraction on Monday. In the below, we can see that AMZN has remained in an overbought position for the last 3 days.

Now, the ratio remains for the calls team with a 0.46 ratio. However, I think I want to wait out for a pull back on Monday before jumping in.

I don't know what the news will bring over the weekend, and I certainly don't know how much the market will be affected, but I will continue to keep an eye on XLY and AMZN on Monday.

The weekend's here so there isn't much to look at, but I do think I will try different analyses with this approach and look at retroactive data. I didn't open a contract, but I am glad I did not and I'd rather wait for Monday to make that decision. If this new angle has taught me anything is that I won't hold my contracts for too long.