On Wednesday, the market digested two major news items…
- CPI showed a 5.0% increase in consumer prices over the past year — The smallest increase since May 2021.
- FOMC Minutes reveal that The Fed expects a “mild recession” to begin “this year,” they pointed squarely at the recent bank crisis as the cause.
Markets sold both news items…
SPY 5-Minute Candles – Chart by thinkorswim
Immediately after the CPI report dropped, the market lurched higher … The pop was enough to keep the market from taking a significant tumble.
At the close, all four major indexes were trading modestly lower…
- Dow Jones -0.1%
- Nasdaq -0.9%
- S&P 500 -0.4%
- Russell 2000 -0.7%
Sector Round Up
Under the surface, it was clear the bears had only limited success on Wednesday.
4 of 11 sectors ended the day higher.
At the top…
- Industrials (XLI) +0.3%
- Materials (XLB) +0.1%
- Energy (XLE) +0.1%
The “risk-on” sectors were grouped together at the bottom…
- Technology (XLK) -0.6%
- Communications (XLC) -1.0%
- Consumer Discretionary (XLY) -1.6%
Now let’s look at what failed to budge…
Historically, heavy selling means a higher VIX. But on Wednesday, the VIX actually finished the day lower despite the broader selling in the market.
VIX Daily Candles – Chart by thinkorswim
The chart looks one way when the conditions are bearish and another when things are bullish.
Right now, the VIX is bullish.
Our other signals are unchanged…
This morning at 8:30, we’ll get one more inflation reading…
The PPI report will show the change in prices that producers are facing.
Producer price increases often precede consumer price increases.
*GFAI support at $20
*ELOX resistance at $10
ARCT support at $24, resistance at $27
ALDX support at $10
DTC support at $8
LVO resistance at $1.40
VKTX support at $16, resistance at $18
^EMAN support at $2.30/2.20
^SQSP support at $32
Secondary watchlist—float 100+ million
^IOT support at $18, resistance at $20
XERS support at $2
TGTX support at $20
RIOT on watch
^IONQ support at $6, resistance at $7
ARDX support at $4.20
NGD support at $1.20