Please watch the video. It nuances what I am going to say about the next couple of days in terms of price patterns and price support and resistance.
We will get CPI data this morning. Grandma Yellen (who is really Commander Nega-Yellen of the Zero-And-Below-Zero Interest Rate Army acting like a kindly grandmother), is telling you that “low inflation is coming.”
I would dare say that no one trusts her or Jerome Powell in that statement if you have watched market action over the last month.
Be that the way it is, we could have a move up that could be substantial and a move down that could also be substantial, depending on institutional takes and mom-and-pop reactions.
If MNQH23 can remain above 11714, then it can easily take out 11880.25 and run to 11944 before hitting price resistance. If buyers are active, it could easily rally to at least 12024 and beyond even to 12114.
If not, we could have a trip back to 11582.50 and even 11501.50.
A lot could depend on what happens at 0830 EST if the CPI number is hot or cold. If it is cold, I would assume it would be party time for bulls and if not, the bears might win out. I still believe what would drive this market more is a determination of the amount of and how long interest rates will rise, which comes tomorrow.
What is most sickening to investors (as it was in the 1970s) is how much market action is devoted to these decisions. Had there been fiscal and monetary management in our economy for the last 51 years, it might not have been, and we would have had a fair fight with market sentiment, technical analysis, earnings, and enterprise values that were based on real earnings and rational expectations. What we have today is an open casino with the magnet at the roulette wheel run by the Federal Reserve and large institution sentiment.
I sat out yesterday because of a lack of volume, and I may do so again if that low-volume action happens today. I will be patient and wait my turn. No reason to get blown out of a trade at the stop because of indeterminant price action.
I think the indeterminacy of price action will end tomorrow however, just saying.
More is coming soon.
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