All 3 major US indices ($SPX, $DJIA, and $NDX) pared their early advances, and are trading below their opening levels on what has been a choppy/volatile day of trading in US Equity Markets for the first session of the week.
It seems that investors are remaining cautious as they make sense of stagflation in the global system, which consists of slowing global growth on the backdrop of rising costs of goods & services, which can be technically labeled as inflation.
Supply-side shortages are contributing to this period of stagflation, which, in times past, has been marked by a gentle selloff in stocks across the board. This may explain why investors are reluctant to buy risk assets ahead of Wednesday’s US CPI data, and the first round of US Earnings Data.
The risk sentiment turned mixed to slightly negative in the late afternoon and prior to the close of the New York session. Equities were being dragged lower by weakness in the Utilities & Communication Sectors in the S&P 500, while Basic Materials and Information Technology companies still held onto their gains from earlier.
Although the three major indices look poised to end their day with a full erasing of their gains, the yen crosses that we discussed in the previous post continues to remain parabolic and rally on interest rate differentials. So, sell the Japanese Yen (JPY)!
Here’s the post from earlier:
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Marvin Perry has been an active trader within the Forex market since 2010. He attended the University of Illinois in Urbana/Champaign, and graduated in 2002 with a double major in Cell and Structural Biology and Chemistry. He currently serves as an FX instructor & Quantitative Analyst for the Forex Anatomy Private Trading Community called "The Lab", where he conducts live weekly trading webinars & instruction on Fundamental Analysis & Inter-Market Interpretations of dynamic asset classes and their influence on currencies.