CPI data higher than expected --> downward pressure on stocks
Hi,
CPI or Consumer price index is a measure of inflation and if this figure rises, it generally means that consumers have to pay more. This is bearish on the markets. The data released at 8:30 am EST was worse than expected and there was already immediate reaction to the market. The market was heavily shorted and it opened with a gap down.
From Briefing:
Total CPI rose 0.6% in April (consensus 0.5%) ? the biggest rise in three months while the closely watched core rate (ex-food and energy) rose a more than expected 0.3% (consensus 0.2%), countering yesterday's tame inflation read.
It is not advisable to long today, given the CPI index is higher than expected resulting in a downward pressure. Going short is definitely the way to go, however market was erratic before 11:00 am. My chance came when price shot past the low of the day and I entered at 1613 and another contract at 1611when price pulled back, my profit target was at 1604, approximately 10 points away from the start of the break down. The trade went smoothly and my profit target was hit effortlessly with $320 in profits.