CPI expectations are benign. Here's a look at the charts and data behind expectations for an imminent move higher in SPX and NDX.
SPX has been pretty flat this week, chopping around under that important 7765 level. Thats the level that VOlsignals says that above there, the market maker positioning supports a trend higher.
https://preview.redd.it/uq8denvgoxih1.png?width=1400&format=png&auto=webp&s=4e4a4de254e6fdb110e98d477babfdaef3f2ef12
The chop has allowed the EMAs to catch up and we are now playing for the 5d EMA, with the 9d EMA a small bit lower.
If we look at NDX, we are playing off the 5d as well, looking for a breakout today.
https://preview.redd.it/uwfklgnhoxih1.png?width=1400&format=png&auto=webp&s=1017bf263d53a91ae1cdfb378b3f156a8825a22d
All of the data suggests we are still on a path higher.
This is what the Aion Analytics forecast shows:
https://preview.redd.it/6x40vseioxih1.png?width=1400&format=png&auto=webp&s=397003a5de6f123416e654f783879b3e3d7d3869
My order flow guy says that he spotted what he considers to be institutional size accumulation in the auction yesterday, and believes that we are also setting up for a rally higher.
Outside of that, this is what the data shows:
On SPY, we have the charm anchor higher which gives us positive drift as bias.
Volsignals says that above 7765, the market is set to trend. The data from Aion Analytics shows that above 785, there is next to nothing stopping us moving towards 800.
https://preview.redd.it/57b4m1ijoxih1.png?width=1400&format=png&auto=webp&s=59424c3127a840b058d343bbd6cd051c0acc9c68
If we look at the heatseeker charts, we see that most of the gamma and vanna is positioned higher into the EOW.
https://preview.redd.it/xfiw0zbkoxih1.png?width=1400&format=png&auto=webp&s=d0173bc274fb60470f17956138f8595219c03fee
What is interesting is that this seems to align with what the options data shows as well. Interestingly, despite expectations of a soft cpI print, the market is not seemingly pricing a massive move today. WE could get it, but the market is more focused on there being a bigger move into Friday.
Now if we look at QQQ's data, we have most of the positioning higher on 730.
https://preview.redd.it/3cnjfldloxih1.png?width=1400&format=png&auto=webp&s=0012bd5711e2a134d9dbd5eee0953b103143ea7b
And the gamma exposure looks a lot more positive.
https://preview.redd.it/frc8rt9moxih1.png?width=1400&format=png&auto=webp&s=cb08def5bcdcb912d494171f5fc07efc289d7607
Coming onto SMH. There are 2 charts that we can watch here. SMH, which is cap weighted so is weighted more heavily towards NVDA, and also XSD, which is equal weighted, and probably a better indication of broader strength in the semi/AI space.
XSD is riding the channel higher, holding the 5d EMA yesterday. Above the 50% retracement, we should see this kick off higher.
https://preview.redd.it/unxva56noxih1.png?width=1400&format=png&auto=webp&s=7a0852c08e99c9921ae205afd84c434af11e16d9
Then if we look at SMH:
https://preview.redd.it/1jxmylxnoxih1.png?width=1400&format=png&auto=webp&s=66951d5369d669ce99139c883dffe703c01af003
The positive reaction to LITE, CRWV and NBIS means that we are above the 578 level in premarket. We continue to hold the weekly EMAs.
SMH gamma positioning is a lot more positive now, with call gamma building up to 600.
https://preview.redd.it/qmrip97poxih1.png?width=1400&format=png&auto=webp&s=a7ca63fc777a4f8656109f8dbf6271fdd3af4cc1
I think we can expect a move to that 604 level soon, based on the data which should bring the entire AI space higher with it.
We know that institutions are accumulating tech, which aligns with what my order flow guy was suggesting:
https://preview.redd.it/gr56cn5qoxih1.png?width=1400&format=png&auto=webp&s=f605b9c26bb74f37b48345a593dc91f9d18063a8
There's still a lot of leverage to put back on, as we see here. The NVDA earnings later this month should be a tailwind for the AI stocks to build into.
https://preview.redd.it/ho5vne3roxih1.png?width=1290&format=png&auto=webp&s=e394438aa6fee15cecb2fc6ad549181e8ca0a9cc
Now if we look at the overall sector dashboard from Aion, we see brand strength. Almost every sector here is 9/9 bullish in terms of structural indicators, or 8/9 bullish.
https://preview.redd.it/w6x2g9vroxih1.png?width=1400&format=png&auto=webp&s=b9dae9ea57aaff77a8c00eca0ff24617a953be33
I continue to think the market is priming for a bigger expansion higher soon.
Let's see CPI in about an hour as our next datapoint to work off of.
For more of my daily analysis, please feel free to check out my subreddit r/tradingedge