Temporal inflation hysteria

US equity indexes closed broadly higher, sp +35pts (1.3%) at 2698. The two leaders - Trans/R2K, settled +1.0% and +1.8% respectively. VIX settled -22.9% at 19.26. Near term outlook offers the sp'2710/20s, which is where we'll likely get stuck. A re-test at/near last Friday's low of 2532 is on the menu next week.


sp'daily5

VIX'daily3

Summary

In pre-market, the sp' was higher by around 13pts. Then the CPI data was released - m/m +0.5%, the algo-bots freaked out, and swung the market to -35pts or so. By the time the market did open, declines only amounted to -10pts. Once again, there was a distinct turnaround, with the sp' settling significantly higher.

Volatility saw a spike in pre-market to 25.72, but then melted across the day, settling back under the key 20 threshold for the first time since Feb'2nd.
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Rate hikes and inflation

The market is currently expecting 2-3 hikes this year. Yours truly is holding to 4 hikes.This morning's pre-market reaction to the notion of higher inflation is a sign the mainstream are still very twitchy. Ironically, this is the same mainstream that have been seeking inflation >2.0% for around a decade.

Ohh, and to be clear, if the Fed don't raise rates this March 21st, that would merit provisional alarm bells. For the moment, I still think they will, but each point lower in the sp'500... will lower the probability.

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Yet another turnaround Tuesday

US equity indexes closed on a somewhat positive note, sp +6pts at 2662. The two leaders - Trans/R2K, settled +0.8% and +0.3% respectively. VIX settled -2.5% at 24.97. Near term outlook offers further upside of 1.5-2.0%, then things get real tricky for the bulls, as a re-test of the hyper-spike low of 2532 is probable.


sp'daily5

VIX'daily3

Summary

US equities saw a day of moderate swings, seeing an early low of 2637, but then battling upward into the afternoon. The daily gain is just part of a rally that will likely take the sp' back into the low 2700s. The 50dma - currently at 2720, will offer prime resistance.

Volatility saw an opening high of 27.82, but then melted lower across the day, settling in the upper 24s. Further cooling to near the key 20 threshold looks due within the next few days, before a probable swing back to around 30/35.
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Bonus chart: Japan, monthly

The Nikkei is currently net lower for the month by a powerful -8.0% at 21244. Any sustained price action <21k would be a break of key support, and would merit alarm bells. If the BoJ are going to spool up the printers, now would be the time.

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Multi-day bounce

US equity indexes closed significantly higher, sp +36pts (1.4%) at 2656. The two leaders - Trans/R2K, settled +1.6% and +0.9% respectively. VIX settled -11.9% at 25.61. Near term outlook offers further upside into the low sp'2700s, where things start to get complicated.


sp'daily5

VIX'daily3

Summary

US equities opened significantly higher, and after a cooling wave (almost to break even), resumed strongly upward. Today gives strong confirmation that last Friday saw a key low of sp'2532. The low 2700s seem a given by Thurs/Friday. Things will get increasingly tricky, with many aspects of resistance from the 2700s upward. We also have two upside gaps in the 2800s.

It was a mixed day for volatility, seeing an early low in the 26s, then swinging to the 29s, before further cooling to the 24s. What is perhaps most notable about the VIX lately, are not the recent hyper spike highs, but that its sustainably elevated. Just consider that last year only saw the 17s.

The next few days should favour the equity bulls, but lets be clear... there is a threat of something much more severe into March. More on that in a few days, once we're in the 2700s.
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Ray of light... for the bulls

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