U.S. stocks fell for a fourth consecutive session today as a fresh spike in crude oil prices and jumping Treasury yields weighed on investor sentiment.
The August Producer Price Index (PPI) report revealed wholesale inflation grew by 0.4% month-over-month and 5.4% year-over-year. The combination of stubborn inflation and triple-digit oil prices (CL=F: $103.9) fueled bets that the FED will raise interest rates next week, with the current probability sitting at 71%.
Adding pressure to the market, the European Central Bank (ECB) raised interest rates by 25 basis points today to control inflation pressures.
Yesterday I noted that the bearish move was unlikely complete for the SPX, considering a potential gap fill attempt to 7,667. The Central Daily Level (CDL) for today was also shared so they would help to validate direction, indicating that momentum would be bearish below 7,640.4 and bouncy if that level was recovered. If not, 7,603.9 and 7,583.6 were bearish targets posted last night, and today’s price action indeed moved between those two levels since the CDL was lost.
The decline in the SPX is playing out as anticipated in last week’s Weekly Compass 🎯, currently down 1.6% for the week, while DIA stands as another bearish setup cumulating a 2.5% weekly loss 🎯.
Tomorrow brings CPI news at 8:30 AM New York time. A series of indecisive daily candles for the SPX has shaped the weekly decline, the setup remains bearish, and the move does not look complete. The essential levels to watch tomorrow are detailed in the daily plan below, including the Daily, Weekly and Monthly levels. The daily levels help navigate the weekly ones by providing narrower zones where institutional algorithms have proven to react, they also provide early warnings.
Daily Levels in Action:
Reviewing this week’s four-day price action for the SPX, when it lost the Central Daily Level (every day so far), the price has moved in between the lower levels symmetrically. It is clear how institutional algorithms react to these levels. Premium subscribers receive these lines at market close for the next day, and the price levels for tomorrow are provided below.
The chart shows clearly how once the CDL is lost, the support lines shared in advance act as key lines for institutional algorithms, price action and numbers always tell the true, the chart sows the lines that have framed price action every day.
We have studied this week how to use the Setups Blueprint posted every Saturday, it includes using levels/price targets, risk-reward ratios, momentum status, and invalidation levels for all the tickers in our watchlist, the educational content posted this week is here, and today we continue with a third installment focused on the daily dashboard or watchlist tracker posted in the daily market updates.
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Today’s Agenda
How to use the Watchlist Tracker
Daily Plan for SPX and ES=F
Combined Levels for Tomorrow
Let’s begin.
Using the Watchlist Tracker
When you track the SPX alone, it is a completely valid strategy. Focusing exclusively on an individual stock like NVDA, AAPL, or MSFT is also a valid approach. However, there are two distinct implications to this: the index may experience choppy price action without a clear direction, or an individual stock might move against expectations.
This highlights the primary advantage of having all the securities on our watchlist in a single, unified view: you can see daily changes, accumulated weekly changes, and the relative distance to the Central Weekly Levels and Central Monthly Levels for each ticker that we track.
Key Advantages of the Tracker
Comprehensive Market Visibility: Having a broad, daily view allows you to make informed decisions not just for a single stock, but across all securities on our watchlist. You can identify the main movers of the day/week and assess opportunities.
Structural Market Clarity: By evaluating securities against their Central Weekly Levels and Central Monthly Levels, you gain a clear picture of each asset’s underlying structure in a single view. As shown below, the anticipated negative moves SPX and DIA are playing out as expected; the loss of both the Central Weekly Levels and Central Monthly Levels validates that bearish momentum remains firmly in control, as the bullish structure continues in play for AMD, META, TSLA, SPCX, and the ones highlighted.
Spotting Divergences and Velocity: Conversely, other securities move with greater velocity or in the opposite direction. For instance, I anticipated VXX to act as a bullish security this week. As seen below, it has rallied 6.5% so far. It is close to reclaiming its Central Monthly Level, which could flip structural momentum and signal higher risk for the wider stock market if recovered.
Managing Invalidations and Reversals: XOM is the best case for this week, the bearish reversal has been postponed and the structure is getting bullish, the fact that the stock is significantly above both its CWL and CML suggest caution before shorting it blindly.
Instant Risk Assessment: Having indices, mega-caps, ETFs, and multi-sector stocks organized in one dashboard lets you instantly spot which assets have lost structural momentum for traders and long-term investors through the loss of their Central Monthly Levels, while simultaneously tracking shorter term behavior relative to their Central Weekly Levels.
The dashboard is here: