OP Wire 3/18 (OP – Lite)

By Steve

Central Bank Week Takes Center Stage

This week marks a significant period for global financial markets, as Central Banks across major industrialized nations are set to convene. All eyes will be particularly focused on the Federal Reserve, which kicks off its policy-setting meeting on Tuesday. An announcement is expected on Wednesday, with the consensus leaning towards unchanged rates. This anticipation builds on Fed Chair Jerome Powell’s earlier remarks this month, highlighting a desire for further evidence of inflation’s slowdown before considering any rate easing.

Economic Indicators Prompt Caution

Recent U.S. economic data has injected a dose of reality into the markets. Surprisingly high producer and consumer price indices have led traders to scale back on their expectations for Fed rate cuts. Market participants are now keenly awaiting further insights into the Fed’s rate cut outlook, the resilience of the U.S. economy, and the potential for an inflationary resurgence.

Global Central Banks in the Spotlight

The Bank of Japan (BOJ) also convenes on Tuesday amidst speculation around the potential cessation of its eight-year negative interest rate policy, signaling a significant departure from its extensive stimulus strategy. Meanwhile, the Bank of England is set to meet on Thursday, with predictions suggesting a hold on interest rate changes as it navigates the waters of wage growth comparisons with the U.S. and Eurozone. Market anticipations are leaning towards a borrowing cost cut from 5.25% – a peak not seen since 2008 – following moves by the Fed and the European Central Bank later in the year.

Tech Giants Embrace AI Innovations

In the tech realm, Apple and Alphabet (Google) are reportedly in discussions to integrate AI capabilities into iPhone offerings, a move reported by Bloomberg. This collaboration aims to incorporate Google’s Gemini AI engine, reflecting a strategic move as Apple seeks to catch up with rivals like Samsung and Google in AI feature integrations.

Nvidia at the Forefront of AI

The spotlight also shines on Nvidia, as the GTC developer conference gets underway. This marks the first in-person event since the pandemic, with the tech giant expected to unveil new AI-focused flagship chips. Nvidia’s market performance has been stellar, with significant year-to-date gains propelling it to the top of the SPY index, making its upcoming AI announcements highly anticipated by investors.

Oil Prices Witness Uptick Amidst Market Anticipations

In commodity news, oil prices have seen an increase, continuing the momentum from the previous week on the back of tighter global supply forecasts. The crude market’s recent surge to four-month highs can be attributed to robust U.S. refinery demand, geopolitical tensions, and optimistic projections from leading energy organizations. Nonetheless, the market remains cautious as it navigates through the impending central bank meetings, with the Federal Reserve’s decisions eagerly awaited.

SPY/SPX – Last week, the S&P closed with the second consecutive red week, something that has not happened since October 2023. The main level of interest for this week will be 5220. In the case of Friday’s late weakness continuing below 5220, price can see a test of 5165, 5120, and potentially 5075.” On Friday, price managed to test that first weekly timeframe downside level of interst at 5165.

For this coming week, the main focus is whether sellers can show a continuation of Friday’s move. For now, price continues to trade within an intermediate-term range and a long-term uptrend. The main level on watch is last week’s low at 5157. If sellers can show acceptance below this level, it would signal the first change in character in months. Weakness below 5157 would target 5130 and 5060. If buyers continue to defend last week’s low, price would target 5200, 5220, and 5257.

Upside levels of interest: 5200, 5220, 5257

Downside levels of interest: 5157, 5130, 5060

Notable Economic Data

Tuesday: 20Y Auction
Wednesday: FOMC Interest Rate Decision
Thursday: Jobless Claims, 10Y Auction

Notable Earnings

Wednesday: MU
Thursday: FDX, LULU, NKE

Friday was a fun day as we alerted AAPL which quickly paid us at least 17% gain and if held will pay a lot more at open. Per usual, secret sauce live stream with Greg paid along with AC&I and Swing Trade plays. Friday should have made everyone’s week alone!

Patience pays as it always has here at OP!

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