Another sleepy day. We received labor data this morning indicating a strong labor market. That rocked the market, and investors panicked again, thinking that the FED would go amock and raise the rates more, higher, longer, and indefinitely. But they forget that the FED has its hands tight already unless they want to crash the entire economy and the world with it. And the labor data is not the only piece of the puzzle here. Overall, inflation is easing, although we still may wake up to a nasty surprise tomorrow.
Although the market sold off today, it was a mild selling again. We saw a 1.20% decline at first, but then Bullard said that the FED might slow down the rate hikes, and the market recovered some of the losses (it was down only 0.70% at some point). Yet the market finished down -1.00%. But the most important thing is it still holds the 3,800 support. As of now, it is a good thing.
The price is inside the green cloud and above the red cloud support line. The line is stepping up slowly, and the market must stay above it. If we break down, we will have a problem.
The blue line is still deep below the thick red line, which is not good. We need these lines to reverse. But as of now, these lines and the cloud changing into the red is not good for the market. We may fail.
The expectation is that the market will continue lower or sideways. But tomorrow, before the market opens, we will receive CPI data. That can completely change the narrative. If CPI comes out weak and slowing, the market will likely rally. If the CPI shows inflation rising again, expect a sell-off. It is a wild card and unpredictable. Anything can happen, so the best strategy now is to stay aside.
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