CPI Creates Chaos in the Market


Simpler Trading Team

Mar 14th 2023  .  3 min read

CPI Creates Chaos in the Market

Equity indices remained relatively stable overnight, with S&P 500 futures maintaining their position above the significant 3,900 mark. As the market anticipated the release of the U.S. Consumer Price Index (CPI) report, a gradual uptick in the indices was observed. At 8:30 AM Eastern Time, the CPI data was released, eliciting a mixed response. The figures aligned with expectations, showing a 6.0% year-over-year CPI increase, which initially triggered a brief decline. However, this downturn was short-lived as the market quickly rebounded, signaling a growing bullish sentiment.

This optimistic outlook became more apparent as the opening bell rang and the CPI report garnered a positive reception across the market. An early sign of a potential upward trend was the Nasdaq’s sustained lead. Technology stocks persisted in demonstrating the resilience exhibited during the previous session’s close. It is noteworthy that the Nasdaq was the only sector to close positively yesterday. In today’s trading, the technology sector continued to display strong performance, with the Dow Jones Industrial Average also contributing to the upward momentum in the market.

Options with Taylor Horton
Futures with Raghee Horner

Nasdaq Continues to Carry the Weight

The market’s momentum persisted during the opening phase but began to wane shortly thereafter. A swift decline offset the gains achieved following the CPI report’s release. Volatility, a defining characteristic of the current market, can either benefit or hinder traders based on their strategies. Navigating such a volatile market environment effectively requires appropriate guidance.

As the S&P 500 futures appeared to be heading towards the crucial 3,900 level, a sudden reversal occurred during the power hour. In the final 45 minutes of the cash session, the S&P 500 futures rallied by 50 points, culminating in an exceptionally volatile trading day. This surge positioned the S&P 500 futures at their 200-day Simple Moving Average (SMA).

Volatility has intensified since the beginning of the week and showed no signs of abating during today’s session. As the market looks ahead, volatility is expected to remain a key focal point, with several notable events on the horizon. In the coming week, market participants will closely monitor the Producer Price Index (PPI), Options Expiration, and the Federal Reserve’s rate hike announcement. Each of these events has the potential to trigger significant market fluctuations and disrupt the trading landscape.

Wild Turns in the Market Create Opportunities

For insightful guidance during the upcoming trading sessions and to leverage the opportunities presented by market volatility, consider joining the Simpler Trading Options Trading Room. This forum is populated by experienced traders who have encountered and navigated similar market conditions numerous times. These seasoned professionals can provide valuable insights, help put the market into perspective, and share their strategies for navigating challenging market environments.

Tomorrows Volatility Catalyst

At 8:30 a.m. Eastern, the Producer Price Index (PPI) will reveal its statistics. The core PPI is set for 0.4%; anything above this forecast may lower the market. Conversely, if this number is more relaxed than expected, the upside potential for tomorrow may present itself. 

Volatility Filled Session Closes Green

The Nasdaq and the S&P 500 were positive to close the session. The S&P 500 futures closed up 1.52%, adding 59 points, while the Nasdaq futures closed up 2.16%, gaining 260 points. The Dow Jones futures followed, closing up 0.91%, an addition of 292 points.