CPI Game Plan
S&P 500 day of indecision lends more support to the bearish case, and the sellers are likely to appear with more force and somewhat better success today. The weak seasonality together with hawkish Fed bets (3m T-Bill made a new high at 5.31% now), will keep exerting pressure on the banks and their deposits situation).
Today‘s outlook is bearish, pointing to a break below 4,136 on a closing basis – and the countdown to recession keeping a lid on risk-on metrics (cyclicals, smallcaps) is on. Even crypto joined, which is a good sign no matter daily improvement in Nasdaq market breadth.
Depending on the strength of pre CPI positioning – my detailed prognosis for all of this week‘s macroeconomic data can be found in yesterday‘s extensive article – the bears can think about 4,128 (quite minor support) and crucially 4,115. Choppy day with a bearish bias is what‘s most likely ahead as tomorrow‘s hotter than expected inflation data would spur stock market selloff.
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Let‘s move right into the charts (all courtesy of www.stockcharts.com) – today’s full scale article contain 6 of them.
S&P 500 and Nasdaq Outlook
Poor moves in KRE, XLF, XLB and XLI while tech including semiconductors continues underpinning the markets, don‘t bode well for good S&P 500 returns on the long side. Following the break of 4,039, the selloff would accelerate, but we‘re still long way from that figure. The preconditions are however in place, and crypto with banking are but the only indications.
4,078 break is the ultimate bearish objective to give them the clear upper hand (midweek?), and start ushering passive indexing readjustments aka broader synchronized selling.
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All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice.
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