Inflation is OK

Outlook 02/14: Inflation is here and the stock market seems OK with it. On Wednesday, we learned that consumer prices rose more than expected in January, and on Thursday we'll get another reading on price pressures in the economy from the January print on producer prices.

/ES Value: YVAH 2701 YPOC 2697 YVAL 2670

/ES Plan: Yesterday market closed leaving bullish imbalance (PBT 2718) and overnight gets balance moving above Yesterday's value, so as usual, we've 2 options:

A) If market remains above YVAH 2701 with bullish internals, try to be a buyer leaning on 2700-2701 towards ONH 2719.50 LVN 2733 and PBT 2750. 'Look above and fail' is a signal of weakness.

B) If market starts to move below YVAH 2701 with bearish internals, try to be a seller leaning on 2700 towards GAP 2696.75 and LVNs 2685-2670. 'Look below and fail' is a signal of strength.

Tips: Market does appear to be calming down but depth of market (DOM) is still thin, mostly below 200s contracts. A 'normal' orderbook usually shows 300-400s. If you can't trade using wide stops (10-15 pts), I recommend to trade 1/2 of your normal size or stay aside until the markets stabilize and recover a 'normal' regime.

Today's Economic Calendar

09:45 Bloomberg Consumer Comfort Index
10:00 NAHB Housing Market Index
10:30 EIA Natural Gas Inventory

Disclaimer: All information on this outlook is for educational purposes only and is not intended to provide financial advice.

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