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Fed Watch With CPI Ahead This Week- 8Aug, 2022

Market Outlook – Quiet news day- the new futures levels and spy/qqq levels are up in the Teams environment. If you are a silver member, you should be directed to the environment once you sign up. Please email me if that has not happened.

We’ll be watching for the traders to hold these breakout levels, else support on the horizon gives us the real entries long. Elliott wave guys are predicting that we could run all the way 4558 or higher before the next meaningful leg down so we need to be careful about shorts. Earnings continue to trickle in but the big guns are finished. The next real catalyst for motion is either a massive short squeeze because big money is positioned in a very bearish fashion – or the Fed release about rates in September.

On Wednesday, the CPI will come out and the Fed watches this number quite a bit. They are now vocalizing that they are data dependent.

Here’s a look in pictures at the data from the week past, but first we will consider what the calendar looks like. Wednesday and Thursday are the important days for releases.

From Bloomberg
Increasing illiquidity
For the bond geeks- the 3mo-10yr spread is the one most of the biggest funds watch
Everyone else watches the other spreads
This chart should impact consumer sentiment here in the States with prices coming down at the pump
The battle about whether inflation is subsiding in the picture here – as Core CPI (all the stuff we don’t need) begins to fade
Since the analysts are now downgrading the estimates, the game as begun- as companies will release earnings and ‘meet’ expectations
China ‘usually’ runs ahead of us from a timing perspective but their lockdowns are likely to skew this chart
Not really sure why it’s a big deal to say we are in a recession or not but this chart shows us clearly divided in that camp
Money Flow
Probably depressing if you did not change jobs
This stinks unless you are at the top of that heap
Very interesting sentiment readings

The BIG takeaway is that big money is positioned very bearishly and if we have a bear rally, it will be FIERCE as these positions have to be unwound.