While there’s no question that CPI remains too high, the Feb data came in at a level low enough to assuage fears of a 50 bps Fed rate hike.

Headline registered 6.0% annually and 0.4% monthly (versus 6.4% and 0.5% prior) and Core CPI came in at 5.5% annually and 0.5% monthly (versus 5.6% and 0.5% prior.)

The algos, already up sharply overnight, liked what they heard.

continued for members…

Importantly, VIX is pushing back below its SMA200 after topping out at TL resistance yesterday. This leaves equities with a good opportunity to recover back above their SMA200s as we approach the Fed meeting and OPEX.

EURUSD and USDJPY are both helping out modestly, with USDJPY in a bit of a panic as NKD is still loitering below its SMA200. GC and SI are both backing off yesterday’s highs just a bit…

…while BTC is soaring yet again after backtesting its SMA200. This time, however, it has reached the TL connecting the highs since Sep 2022. Traders should probably take profits at this point, as this bounce is very much overdone.CL and RB are both edging lower – which is necessary in order to bring CPI back down to acceptable levels. Look for them to continue slipping even though China’s reopening and seasonal factors argue otherwise.

Shelter inflation accounted for a full 70% of the total, meaning that the path back to 2% will remain tortuously slow. Other than in the early days of the pandemic, when was the last time you heard of a landlord lowering rent?

Toss in very sticky wages inflation, and it will take a recession to get CPI back to 2% any time soon.

The question remains whether algos can look past the recession risks to keep stock prices on the rise. I’ll be watching SPX 3920-3940 – the top of the broken red channel and the SMA200. If SPX can push past, then we should get a nice (probably countertrend) rally into PPI/FOMC/OPEX. If not, this bounce is as good as it’s going to get.

GLTA.