Reading the Data: Data Interpretation is Key in This Game

The market continues to drop on 04/27/2024, and that's because the data doesn’t align...

Here we see the importance of quickly interpreting market data to forecast and act swiftly, whether through CALL/PUT options or any other instrument.

What market data scared investors?

On Friday, 04/27/2024, a slowdown in GDP growth was reported, with growth at 1.6% when 2.4% was expected.

Additionally, the PCE (Personal Consumption Expenditures) jumped from 2% to 3.7%. As you can see, this does nothing to help fight inflation… more consumption means higher demand, and if production doesn't increase (with GDP dropping), we have rising prices.

This clearly shows that the FED’s battle to defeat inflation is far from being won.

So, to summarize, here’s what we have:

• Elevated inflation that’s not going away

• A strong labor market

• Stocks and crypto surged in Q1 (on expectations of a rate cut)

• Narrow credit spreads: it’s easy to borrow cash despite the current context

This suggests more indications of a rate hike rather than a cut.

For now, the market expects a flat scenario, meaning no rate cuts or hikes, remaining steady...

But if we analyze it from a logical standpoint, the most likely scenario is a rate hike or an announcement of rate hikes rather than cuts… and we know the potential impact such an announcement could have on the market if it happens.

The 2-year Treasury yields (US2Y) are hitting 5%, the highest point in 5 months…

Slight recovery in market enthusiasm.

The Fear and Greed Index shows a slight recovery in market enthusiasm after bouncing back from the Fear region. We are witnessing a rebound, supported by strong earnings reports from some tech companies, following a drop of more than 5% in the S&P 500, which is no small matter.

Dead cat bounce or a return to the bullish trend?

In the chart, we can see how the SPY recovers in swings after a sharp drop of more than 5% from its highs.