DrStool Posted April 12, 2023 Report Share Posted April 12, 2023 The bull market peaked at about 4800 in January 2022. The bear market bottomed at about 3500 in October. Half the distance is 4150. And now that the good "news" on "inflation" is out, the ES 24 hour S&P fugutures are driving toward, you guessed it, the middle. The rally broke through resistance and is headed for the next resistance convergence of approximately 4155 in the NY opening half hour. Ooops, it almost hit that already in the kneejerk. If that's cleared, the next target would be 4180 today. I have no cycle projections yet on the basis of 1 day, 2-3 day or 5 day cycles. I can sort of tease one out on a 4 day basis. It looks like 4165. The conventional measured move implication of the high base breakout above 4140 would be 4205, assuming this breakout sticks through 9 AM. If it doesn't, bears go to bat. And as I write, they're selling it. Cycle Indicators Tell How to Play This Rally Now Meanwhile, we already knew that "good news" was coming on inflation because we are watching rents in real time, and we know that the rent component of CPI has a built in lag of 6-12 months. That's because of the insane fraud of BLS tactics in measuring housing inflation by using contract rents instead of actual market rent in real time. Such real data is widely available, but the BLS and Fed policy makers are using old methods that were designed to suppress CPI.That worked on the upside very well, with CPI understating real inflation by about 4-6% points as house prices and rents inflated at a rapid rate. They are now hoist on their own petard of using a deliberately lagged and suppressed measure. I warned a couple years ago that when rents started falling CPI would overstate inflation. That is exactly what has been happening for the last 6 months. House prices are deflating and rents are deflating, and none of that has made it into CPI yet. House prices will never make it because they aren't counted. But rents are, and they are falling, despite how they are counted in CPI. Housing is 40% of core CPI. So CPI now overstates inflation. I won't do the math now. Given the "good news" the 10 year Treasury yield should be falling. It should have broken support. It hasn't. Then there's the fact that $120 billion flowed into the Fed's RRP slush fund in the past two days. That implies a similar inflow into money market funds. That implies a similar amount of withdrawals from bank deposits. Can you say Rutro! And why hasn't some of that cash flowed out along the Treasury curve to push yields down on the 10 year. I don't know why, but it sure as hell is not bullish for Treasuries if they don't break down, right here today. They have the excuse and they have the fuel. Here’s How We Know That Doom Has Already Arrived As this is going on, Gold is showing signs of liftoff from another high base launchpad. Will this be the launch that breaks out of earth's atmosphere? Here’s What’s Next Now That Gold Has Reached Its Limit For moron the markets, see: Here’s What’s Next Now That Gold Has Reached Its Limit April 10, 2023 Cycle Indicators Tell How to Play This Rally Now April 10, 2023 Swing Trade Screen Picks – 3 Buys, 4 Shorts April 6, 2023 Here’s How We Know That Doom Has Already Arrived April 6, 2023 Macro Liquidity Says No Way Jerray! April 4, 2023 First, the Rally, Then … April 3, 2023 Gold Takes a Breather Before Lunar Launch March 30, 2023 Swing Trade Screen Picks – Traders, Take Your Naps March 29, 2023 Watch Out For This If the Market Comes Unstuck March 27, 2023 How to Play When Fed Changes the Game, Not Just the Rules March 19, 2023 Systemic Meltdown Under Way As Dead Bodies Finally Start Surfacing March 12, 2023 February Withholding Taxes Say – Fade the Jobs Report! March 2, 2023 Here’s Why There Will Never Be Bull Markets Until This One Thing Happens February 26, 2023 You Can Now Follow the Diabolical Usual Suspects February 16, 2023 If you're serious about the underlying forces of supply and demand that drive the markets, join me! If you are a new visitor to the Stool, please register and join in! To post your observations and charts, and snide, but good-natured, comments, click here to register. Be sure to respond to the confirmation email which is sent instantly. If not in your inbox, check your spam folder. Link to comment Share on other sites More sharing options...
WTF Posted April 12, 2023 Report Share Posted April 12, 2023 So far, a muted reaction to the "GOOD" CPI numbers. Link to comment Share on other sites More sharing options...
WTF Posted April 12, 2023 Report Share Posted April 12, 2023 NVDA not playing along with the usual script. Gapped up and is now below yesterdays close... Link to comment Share on other sites More sharing options...
SiP Posted April 12, 2023 Report Share Posted April 12, 2023 SPX Link to comment Share on other sites More sharing options...
WTF Posted April 12, 2023 Report Share Posted April 12, 2023 Been kicked in the teeth to many times during this bear market rally to think that the red market numbers now, will hold to the end of the day. What will be the excuse to rally this market into the close today? My guess is FOMC meeting minutes, dot plot bingo... "4.5? does anyone have 4.5?.... BINGO" Link to comment Share on other sites More sharing options...
DrStool Posted April 12, 2023 Author Report Share Posted April 12, 2023 2 hours ago, WTF said: Been kicked in the teeth to many times during this bear market rally. I talked about not getting hung up on semantics in the interview. It's hard to trade successfully when married to a point of view about what kind of market it is. Link to comment Share on other sites More sharing options...
DrStool Posted April 12, 2023 Author Report Share Posted April 12, 2023 I was out all evening. Was there some news. 😄😄😄 Link to comment Share on other sites More sharing options...
DrStool Posted April 12, 2023 Author Report Share Posted April 12, 2023 This late little selloff came from a pronounced negative divergence on the hourly chart. Might mean something. Link to comment Share on other sites More sharing options...
The CoinGuy Posted April 12, 2023 Report Share Posted April 12, 2023 Whatever you do...just be careful. All of tomorrow, going into Friday. TCG oh...and... Corrected... Link to comment Share on other sites More sharing options...
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