Headline PPI reached record highs in February, coming in at 10.0% YoY. Under the hood, prices for unfinished goods registered 14.6%, the highest since January 2001. Prices for processed goods jumped 23.3%. Prices increased across the board, with the largest gains in energy.
Futures were flat going into the early morning VIX plunge, but gained steam once VIX dropped back below its 10-day moving average at 32.28. Look for a backtest of the broken white channel at around 4205.
continued for members…The bigger picture:
The 3.618 Fib sits almost exactly 2% below current levels – not too scary a drop from here.
The 20% correction mark is well below at ES 3769 / SPX 3854.
VIX still suggests a selloff, with tomorrow being the day that the yellow TL passes through the purple .382 mark at 41.36. 
This fan line from the Feb 2020 lows has been very important, providing a backtest which coincided with the past few ES bottoms.
On the currency front, USDJPY has pulled back from the white midline… 
…but is still within striking distance of a breakout. I won’t be surprised to see it break out if another leg down in equities gets too frothy.
GC and SI continue to pull back after falling short of our upside targets.
And, bitcoin is pulling back after backtesting its SMA50 yet again. Note that its yellow channel bottom crosses through the blue .618 retracement at 28,600 in the next few days. It would be an ideal time for a backtest.
If it doesn’t happen, then we’re probably in for a long wait for the SMA200 to curl down to the neckline at around 46,100ish. I’m not as fond of this scenario simply because BTC has already backtested the neckline twice. Remember, it remains in a “death cross” – just like SPX/ES.
CL and RB continue to settle lower, with CL off nearly 10% at one point.
Note that at 94, CL will have backtested the red channel from which it broke out in February.
It still has a ways to go in order to backtest (white arrow) the yellow channel – about 69.83 – 71.90, depending on when.
RB hasn’t quite finished its initial backtest.
TNX is currently not paying much attention to RB. It’s off a couple of percent, but still broken out of the rising purple channel top.
The FOMC will announce its first 25 bps rate hike tomorrow. There should be no surprises, with Jay Powell bending over backwards to stress that it’s data dependent, no preset course, etc., etc.
It will be interesting to see whether February retail sales, announced tomorrow morning, will maintain January’s strong 3.8% growth rate. Remember, retail sales aren’t inflation adjusted (CPI was up 0.9% MoM.) And, the largest increases were seen in categories other than food and energy. If the Feb number is strong, which it should be given spiking food and energy prices, a 25 bps rate hike might come across as much too little (it is) and too late.
Stay tuned…