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Will tomorrow’s CPI report save the market?

In my weekly reviews, I post my market expectations for the week. My expectation was that the market broke up from a small consolidation pattern and would most likely continue higher.

A few days later, everything changed.

At first, the markets took the bad news about jobs as good news. Analysts expected 1 million new jobs, but the economy added some meeker 260 thousand new jobs, only. The market took it as confirmation that FED will not raise the rates.

But then, the market started worrying bout inflation which in my opinion is irrational, well, irrational if we ignore FED.

If we have fewer jobs, fewer people will have less money to spend and thus inflation should be no issue. But the government and FED have given too many people too much money to spend even though they have no jobs.

And the markets crashed, led by NASDAQ as high-flying tech stocks do not like high inflation and high-interest rates which cut their growth.

The latest price action in the markets effectively cancels the previous pattern and it has morphed into a pattern called a “megaphone”. And that pattern is a bearish one. There is a very high chance that the price will break down from the megaphone. If that happens, the 3966 price level will be the retreat…

What can stop it? Only good news on the CPI report tomorrow.

 
SPX market expectation
 





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