All eyes will be on March's CPI numbers due Wednesday morning at 8:30am ET, which should give economists and investors a better idea of if inflation is picking up or falling closer to the Federal Reserve's 2% target rate.
Scott Redler, Chief Trading Strategist at T3 Trading Group, joined Benzinga's PreMarket Prep Tuesday morning to discuss market trends ahead of the report.
Redler outlined his charts, which he does every morning in his trading room, and expressed caution ahead of Wednesday's report. Redler explained that a lot of this year's market leaders, like NVIDIA Corp NVDA, Super Micro Computer SMCI and other semiconductor names, have been losing steam.
"It's kind of tough, the semis are in consolidation mode," Redler said. "In the past week or so NVIDIA just feels like it's just channeling and it's lagging a bit, SMCI is lagging a bit, AMD has been weaker. Semis have not been the bread and butter of the past week like they were for the past months, sometimes you just have to let them rebuild on the side."
Semiconductor names, like NVIDIA and Advanced Micro Devices AMD tend to be more sensitive to interest rates as the companies are borrowing money to grow operations to meet increased demand. Other sectors that are more interest-rate sensitive than the overall market include solar names and regional banks.
Redler also pulled up the charts of the overall market, including the SPDR S&P 500 Trust Series SPY and the Invesco QQQ Trust Series 1 QQQ. Redler explained that the charts show some indication that there could be short-term weakness into and following Wednesday's CPI report.
"And this is what's kind of scary," Redler said of SPY's weekly chart. "Ascending channels are great until they break."
Click here to watch Redler’s full interview on PreMarket Prep.
Disclosure: T3 Trading is a sponsor of the PreMarket Prep program.
Image: Shutterstock
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