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I've been waiting for the Personal Consumption Expenditure (PCE) number all week long.
In fact, I said I wouldn't be placing any trades until that number gets released, as traders know this is the Fed's favorite indicator of inflation.
Well, we got that number - and it is definitely intriguing.
But not in the way that you think. In reality, it didn't have too much of an impact. If it had been particularly negative, well, that might have moved the needle.
But with everything going on in the financial sector, there are more pressing things drawing the attention of the market.
That said, the Fed still is paying attention to that number. And, in all honesty, while the numbers we saw weren't earth-shattering drops, in certain ways, that's better.
Now, the reason I say that a small drop was "better" is because the Fed doesn't want to see volatility in this reading.
With this drop, now the Fed can start to have the conversation of whether or not it's going to respond to what's been going onto the market and allow itself to buy into any of the positive momentum.
This isn't going to be a rate cut right out of the gate. They don't want to spend their bullets too soon, especially considering how long it's taken to even load the figurative gun.
Instead, I expect a slow rolldown.
It should come as no surprise that the area I'm watching closest in the aftermath of this announcement is the financials. But I'm also going to keep my eyes on retail.
The last time we saw this number come out, sometime around February 24, retail was the sector that was impacted the most.
After all, the discussion we're having here is more or less centered around how people are spending their money.
I said on the morning show with Garrett that I was going to be watching the iShares Russell 2000 ETF (IWM) closely, particularly the $175 level.
At that point, it was sort of bouncing around that mark. If it rejected the $175 level and dropped, well, that wouldn't be a good thing for the market.
However, the fact that it broke clean through that $175 level - it's trading above $178 at the time of my writing this - tells me we're in store for a pretty strong start to the month of April on the markets.
That being said, it's not just rainbows and sunshine once April kicks off. A lot of that positive momentum will be founded upon the idea that June will break rate decreases.
As I mentioned before, it's far more likely that the Fed will want to give this time to breathe before pulling the trigger. They only have one crack at this, and as Eminem said, they don't want to miss their chance to blow.
This is a pause, not a pivot. So, we'll w…
About the Author
Chris Johnson is a highly regarded equity and options analyst who has spent much of his nearly 30-year market career designing and interpreting complex models to help investment firms transform millions of data points into impressive gains for clients.
At heart Chris is a quant - like the "rocket scientists" of investing - with a specialty in applying advanced mathematics like stochastic calculus, linear algebra, differential equations, and statistics to Wall Street's data-rich environment.
He began building his proprietary models in 1998, analyzing about 2,000 records per day. Today, that database, which Chris designed and coded from scratch, analyzes a staggering 700,000 records per day. It's the secret behind his track record.
Chris holds degrees in finance, statistics, and accounting. He worked as a licensed broker for 11 years before taking on the role of Director of Quantitative Analysis at a big-name equity and options research firm for eight years. He recently served as Director of Research of a Cleveland-based investment firm responsible for hundreds of millions in AUM. He is also the Founder/CIO of ETF Advisory Research Partners since 2007, noted for its groundbreaking work in Behavioral Valuation systems. Their research is widely read by leaders in the RIA business.
Chris is ranked in the top 99.3% of financial bloggers and top 98.6% of overall experts by TipRanks, the track record registry of financial analysts dating back to January 2009.
He is a frequent commentator on financial markets for CNBC, Fox, Bloomberg TV, and CBS Radio and has been featured in Barron's, USA Today, Newsweek, and The Wall Street Journal, and numerous books.
Today, Chris is the editor of Night Trader and Penny Hawk. He also contributes to Money Morning as the Quant Analysis Specialist.