On guard

S&P 500 bears managed to push prices down on declining volume, and the risk-on upswing in bonds was dialed back. VIX remains elevated while the put to call ratio didn‘t point to rising fear yesterday, and the dollar made no progress while long-dated yields retreated. These are all signs of caution, and do not invalidate my fundamental thesis of seeing stocks potentially spike up on CPI before the still tightening Fed reality sets in again – as described in the below quote from yesterday‘s analysis. The only fly in the ointment is that today‘s premarket didn‘t offer advance clues as to which way the wind is blowing immediately before the CPI data release:

(…) I‘m expecting a sticky CPI and core CPI figure tomorrow – given the price action so far, any potentially positive initial market reaction would be sold into. True, I‘m not looking for such a low CPI figure that would facilitate lasting gains – the sideways trading witnessed currently favors the bears assuming initiative tomorrow. Unless we very decisively close above my 3,635 level with outside markets confirming (unlikely to happen) – if so, I would definitely tweet about that.

The real assets premarket upswing is bucked by cryptos plunging, so the picture with respect to CPI is inconclusive here as well. I‘ll keep updating you throughout the day if any change is posture or positioning is warranted based on the market reaction with Fed tightening reassessment.