Futures are up sharply in advance of Wednesday’s FOMC decision which is expected to leave interest rates at current levels.
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Author: pebblewriter
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Charts I’m Watching: Mar 15, 2024
Futures are flat this OPEX morning as algos weigh the impact of higher than expected inflation, driven largely by rising oil and gas prices.
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PPI Comes in Hot, Too
February PPI came in at twice expectations: 0.6% versus 0.3%. In a replay of the CPI print, stocks dipped for a few seconds before resuming their overnight ramp as algos were more focused on VIX dropping through its 50-DMA just in time for OPEX.
VIX did pop above the 50-DMA…for several seconds. It got better.
Indicators such as RSI still remain on edge.
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On the Brink, Again
The last time VIX cratered to below its 50-day moving average in two days, ES popped over 3%. Then, as now, SPX had committed the egregious sin of dipping below its 10-day moving average as it approached important Fibonacci resistance. The difference, now, is that SPX is on the brink of a breakout above that resistance.
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CPI Hotter Than Expected
February headline CPI came in at 0.4% versus 0.3% expected (and January.) Core CPI registered a 0.4% rise versus .03% forecast and 0.4% prior. YoY, headline was up 3.15%, up from 3.09% in January and a slight beat of the 3.1% expected, while core rose 3.8%, down from 3.9% in January.
Shelter and gas price increases were responsible for 60% of the rise in February.
This is in keeping with our Gas v CPI model which shows a slight uptick in MoM pricing in the midst of a YoY decline.
The short-volatility algos were busy this morning, with VIX diving more than 5% in minutes to back below the 200-DMA.
Futures, which might have been expected to tumble on the expectation of further delays to FOMC rate cuts, rallied instead. 
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RSI’s Warning
SPX’s relative strength index (RSI) has been consolidating for months in a series of higher lows and lower highs. It’s the lower highs that should concern bulls, as they represent an unmistakable pattern of negative divergence that almost always ends in a correction.
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Charts I’m Watching: Mar 8, 2024
Blink, and you might have missed the selloff this morning when nonfarm payrolls came in much higher than expected but the January print was revised sharply lower.
Fortunately, the algos were on it, immediately crashing VIX to a point where a 15-pt decline in ES turned into a 15-pt gain.
This should put SPX at its 1.272 Fib extension, a potentially important level of overhead resistance ahead of next week’s CPI and PPI prints.continued for members… (more…)
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Charts I’m Watching: Mar 7, 2024
ES came within 6 points of a key Fibonacci level on Monday, and has more recently been making minor pullbacks to test its rapidly rising 10-day moving average. The more important test will likely come next week when CPI and PPI are released.
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A Break in the Action
As a reminder, we will not be posting March 4 through March 6.
Trade safe, and we’ll see you all on the other side!
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Is the Meltup Over?
We’ve waited a very long time for SPX’s 50-DMA to reach a great spot for a small pullback. It’s finally here.
Will the market cooperate?NOTE: I will be out of the office between March 4-6, returning on March 7.
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