The numbers for the CPI just came out, and it’s just what the bulls wanted: ice cold.
The immediate reaction on the /ES is no surprise:
One would think “weak inflation, weak precious metals”, but it’s just the opposite. Precious metals are, for whatever reason, loving this news.
And, of course, volatility (by way of VX futures) is getting smashed again to new lows.
The next two points of interest are going to be (a) what the market does after the cash open (b) what the market does later today after the Fed Minutes come out at 11 a.m. PST. From a charting perspective, the crucial line in the sand for the /ES remains the 3186 level from the Fibonaccis. What’s amazing to me is that the net change from April 2021 to today is ZERO. Two years of going NOWHERE.
Another contemporaneous item with an interesting resistance level is the /RTY futures, that is to say, the small caps. The green zone I’ve highlighted represents either an important bullish base (as it was on the left side of the chart) or a point of exhaustion.
As for myself, I’ve got a little over 20% cash, and no doubt I’ll be in some measure of “retreat” mode early on today. Sheesh.
