4/12/22 Inflation is High … Signals Are Mixed

News:

Markets sold off on Monday ahead of the latest inflation data. CPI is due out at 8:30 this morning.

The White House said it expects the number to be “extraordinarily elevated.”

March is the first full month of the Russian/Ukraine war. The CPI reading will indicate how it’s affecting prices here in the States.

The war has placed additional constraints on a global economy already damaged by Covid, massive stimulus, and supply chain delays.

I believe the market has already priced in some bad news. But that doesn’t mean we can’t get a surprise.

I’ll be watching how the markets open after the data drops.

Technicals:

The VIX is still below 25 at writing. As I pointed out yesterday a break above 25 could send the market into a tailspin.

The SPY looks to have established a new downtrending channel. See the chart below…

SPY Daily Candles – Chart via thinkorswim

But the put-to-call ratio is indicating we’re oversold.

The overhead resistance appears to be too much at the moment. Now that last week’s lows have failed we could retest the low of the year…

Signals are a bit mixed right now. So I’m switching to risk-off until the market can give me a clear sign.

Timing:

The two big inflation numbers the market is watching closely this week…

Today: Consumer Price Index (CPI) inflation data drops at 8:30 am.

Wednesday: Producer Price Index (PPI) inflation data drops at 8:30 am.

April, typically the most bullish month of the year, is beginning to show signs of a letdown.

If we enter the summer trading month with bears in charge we may have to wait until the November elections until we see a turnaround…

Watchlist:

*Low Float
^Open Position

*IPI has support at $100
TRVI has support at $2.5
^ASRT has resistance at $3.50
SGML has support at $15
VERU is on watch
BORR has support at $4
^LXU has support at $22
NAT has support at $2.50
BRCC has support at $30
^TWTR has support at $45

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