CPI came in at 1.8%, down from 2.0% in April.  Core CPI registered 2.0%, down from 2.1%.  For the month, CPI rose 0.1% in May versus 0.3% in April.  Core rose 0.1% for the fourth straight month.

A slew of categories fell in May, with the big drops coming in energy and vehicles offsetting increases in food and shelter.  Had gasoline prices not dropped substantially over the past month, we’d probably be looking at 2.0% CPI again.

All in all, the results simply don’t scream “rate cut.”  This should disappoint the market.  So far, the futures are taking things in stride.  But, there’s a big potential downdraft if ES drops through 2872.continued for members…

The most up to date forecast for downside potential…Note that SPX closed below its SMA5 200 yesterday.I’ve redrawn the falling channels to reflect yesterday’s highs as the top of the falling channel which ends at 2138 in early Nov 2020.

This remains my thesis until something happens to indicate otherwise.I’ll be watching to see if VIX pushes up above its SMA200.  Recent forays have resulted in big drops in equities.Oil and gas continue to look weak. And, the dollar is not rebounding just yet. 10Y rates are still poised for another drop. The yield curve has tucked back into the rising white channel – but still broken out.  This temporarily relieves any pressure from the 2s10s.Stocks we’ve been watching…BA’s death cross is fast approaching.  Unless BA rebounds soon, it faces another leg down to tag the .786 at 325.33.

AAPL has pushed back above its SMA200 and it very nearly tagged its .618 at 170, so it’s in a better position.  A drop back below the SMA200 would obviously trigger a sell signal. COMP made it back out of the falling white channel and above its SMA200.  So, it’s out of the woods until/unless it drops back through 7717. If it can’t hold 7717, it faces another test of its SMA200 and a drop to 6948.