Bring on the CPI!

Wednesday already saw the much awaited PPI (producer price index) and the numbers showed that inflation is very much still entrenched in the economy.

I believe the consumer price index (CPI) numbers will be a market mover. The market is so pessimistic and oversold now, anything even remotely good will induce a rally.

Technically, there are some noticeable positive divergences amidst the very oversold markets. The Vaneck Semiconductor ETF is making new lows but the bellweather Caterpillar as wellas the DJ Transports are seemingly making higher lows. This also seems the case with the Small caps Russell 2000. Though not iron cladto herald a market turn, these are positive indicators. The dollar index also seems to be peaking as well as the TLT 20 Year which seem to be in the late innings of a wave 5 move down. All in all, the corrective patterns seen across the sectors and indices are complete or completing and I believe once the market turns, it will be a rush upwards.

Its hard to predict the CPI numbers and a foolhardy's errand to figure out which way the markets move. So I usually prefer to let the charts derisk my investments. I believe the technicals are way oversold with large divergences and rare selling exhaustion signals. Yes the markets can still go down with such signals but the probability is high that we might see a rally soon. Either we trend further downwards upon a disappointing CPI reading in which case I believe we are bottoming at 3555-3535 or at the very most 3480 before turning up, or we turn upstraight after the reading for a powerful rally.

Stay safe 😊