Trump: Tell the FOMC to end QT

February 12, 2025, 10:36 am ET, BY Thomas H. Kee Jr- Editor, Stock Traders Daily| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

Today's CPI backs the FOMC into a corner.  Liquidity is an issue.

January CPI 0.5% vs. 0.3% consensus; prior 0.4%.

Our most recent Economic Comment came after the Jobs data, whose headline was weak.  We asked if that was a sign of broader economic weakness.  We still don't know...

However, the other concern we expressed is being satisfied, and then some.

Inflation is a major concern now, again.  

• Today's Hot CPI data, coupled with Tariff-inflation concerns, suggests no rate cut next time. 
• Incoming Economic data would need to be pretty weak for a rate cut next time. 
• This assumes that Tariff-uncertainty looms.

Furthermore, we believe that Tariff-uncertainty can result in economic apprehension. Some decision makers may take a wait and see approach, some may be going at this guns-blazing too, but the majority of Corporate America wants to be able to make calculated decisions; they cannot because they do not know how the chips will fall.  This can result in slower activity and weaker economic data.

Therefore, we believe that Tariff-uncertainty can result in Economic Weakness, and it probably will.

The concern is, how long will economic weakness manifest?

• We already know we are in a Period of Low Liquidity.
• Low levels of Liquidity, are caused largely by the FOMC right now.
• Our Global Liquidity Report (link below) identifies Natural NEW demand for assets

Call to action: The FOMC can improve liquidity by putting an end to the balance sheet run-offs.  

Specifically, the NATURAL inflows of NEW Money, as defined by “The Investment Rate,” our Macro Model, will not longer be impeded by QT; The FOMC is like a vacuum to liquidity, and that is happening while the Natural levels of demand are about to transition from a trough.

(Review our Special Reports for Details).

Longer Term Trading Plans for SPY

• Buy SPY near 588.2 target 606.7 stop loss @ 586.5 Details

The technical summary data tells us to buy SPY near 588.2 with an upside target of 606.7. This data also tells us to set a stop loss @ 586.5 to protect against excessive loss in case the stock begins to move against the trade. 588.2 is the first level of support below 602.42 , and by rule, any test of support is a buy signal. In this case, support 588.2 would be being tested, so a buy signal would exist.

• Short SPY slightly under 606.7, target 588.2, stop loss @ 608.45 Details

The technical summary data is suggesting a short of SPY as it gets near 606.7 with a downside target of 588.2. We should have a stop loss in place at 608.45though. 606.7 is the first level of resistance above 602.42, and by rule, any test of resistance is a short signal. In this case, if resistance 606.7 is being tested, so a short signal would exist.

Swing Trading Plans for SPY

• Buy SPY slightly over 606.7, target 607.58, Stop Loss @ 604.95 Details

If 606.7 begins to break higher, the technical summary data tells us to buy SPY just slightly over 606.7, with an upside target of 607.58. The data also tells us to set a stop loss @ 604.95 in case the stock turns against the trade. 606.7 is the first level of resistance above 602.42, and by rule, any break above resistance is a buy signal. In this case, 606.7, initial resistance, would be breaking higher, so a buy signal would exist. Because this plan is based on a break of resistance, it is referred to as a Long Resistance Plan.

• Short SPY slightly near 606.7, target 600.57, Stop Loss @ 608.45. Details

The technical summary data is suggesting a short of SPY if it tests 606.7 with a downside target of 600.57. We should have a stop loss in place at 608.45 though in case the stock begins to move against the trade. By rule, any test of resistance is a short signal. In this case, if resistance, 606.7, is being tested a short signal would exist. Because this plan is a short plan based on a test of resistance it is referred to as a Short Resistance Plan.

Day Trading Plans for SPY

• Buy SPY slightly over 602.95, target 606.42, Stop Loss @ 601.54 Details

If 602.95 begins to break higher, the technical summary data tells us to buy SPY just slightly over 602.95, with an upside target of 606.42. The data also tells us to set a stop loss @ 601.54 in case the stock turns against the trade. 602.95 is the first level of resistance above 602.42, and by rule, any break above resistance is a buy signal. In this case, 602.95, initial resistance, would be breaking higher, so a buy signal would exist. Because this plan is based on a break of resistance, it is referred to as a Long Resistance Plan.

• Short SPY slightly near 602.95, target 600.57, Stop Loss @ 604.36. Details

The technical summary data is suggesting a short of SPY if it tests 602.95 with a downside target of 600.57. We should have a stop loss in place at 604.36 though in case the stock begins to move against the trade. By rule, any test of resistance is a short signal. In this case, if resistance, 602.95, is being tested a short signal would exist. Because this plan is a short plan based on a test of resistance it is referred to as a Short Resistance Plan.

SPY Ratings for February 12:

Term →	Near	Mid	Long
Rating	Neutral	Neutral	Strong
P1	0	0	588.2
P2	602.95	600.57	606.7
P3	606.42	607.58	622.17

Support and Resistance Plot Chart for SPY

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