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…
- RSI levels are all neutral
- The Put-to-Call Ratio is neutral
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