Will CPI Be The Catalyst This Sector Needs?
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CPI comes out today and this could be a catalyst for the market to make a big move, one way or the other. Despite this pending data drop, there has been one sector of the market that has looked poised to make another break out to the upside.
This has been a sector in play for much of the past couple years at this point as long-term investors flooded the sector anticipating higher prices. Now, the price of the commodity that leads this sector could be coming back into play after a brief pause.
Energy Select Sector SPDR ETF (XLE)
The price of oil has hovered around the $80 mark for the past two weeks after making a significant climb. Now, after holding this key price level, oil prices could be poised to resume its move to the upside.
On top of prices holding this key macro level, CPI is set to be released. Regardless of CPI coming in higher or lower, it should definitely move the market. In a market such as this, it’s difficult to say what effect higher or lower CPI would have on the market, as we have seen bad economic news has often led to a positive move in the stock market.
In this respect, a high inflation reading could cause Energy to spike, higher inflation very often means higher energy prices, which ultimately leads to good news for the energy producers.
On a day like today, however, all bets are off. Be sure to exercise patience and discipline before taking any trades, and remember, cash is a position. There will always be more opportunities.
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