Things Look Good to Me

A whole raft of things I would like to see are coming together here. The shitty inflation print and subsequent drop was a brief distraction from what’s coming anyways, I think.

Here is my interpretation of that:

  1. The market wants to know if the Fed is serious about fighting inflation
  2. That bad print was the test
  3. Last meeting, Powell said, “No 75 bps next meeting”
  4. After the bad print, Powell decided to prove himself by committing to the higher hike, i.e., fighting inflation is so important that he’s willing to go back on his word

What were the results?

Yields, needle candle on the weekly:

10YRYLD

That’s a topping candle if it sticks through tomorrow.

The dollar, needle candle on the weekly:

DXY

That is also a topping candle if it sticks through tomorrow.

Oil, among the largest components of headline CPI, bearish wedge decisively broken down:

OIL

Thus: the market now believes Powell, I believe.

With these all breaking down together, pointing to the end of the inflation scare, now it’s time for equities to rally, which have sold off because of the inflation scare.

And so, I continue to think that the inverse speculated about earlier looks quite good here. And if so, today could have been the crown of the head:

SPY

This could also be a bullish wedge. We won’t know that until we see how it reacts at the neckline if we do get there.

SPY


Note: When articles are first posted, most of them are made available only to my Patreon supporters (I do try to publish some public posts on occasion). Over time (usually after a period of a few weeks or so), I make all of the work public. To gain access to my work when it is produced, please consider becoming a patron. More information may be found on my About page and on my Patreon page. In a nutshell, patrons of any denomination (you get to pick the amount) will be able to read my weekend analyses, Tier 1 members ($20/mo.) get access to all of the articles I write, and Tier 2 members ($35/mo.) get access to those, plus counts on other instruments and my Discord chatroom.


One thought on “Things Look Good to Me”

Leave a Reply

Your email address will not be published. Required fields are marked *