What to Make of CPI

Markets are still climbing a wall of worry. And I've been reading for seven hours.

Dear Fellow Expat:

We’re back in the Yellow territory on the S&P 500. Housing remains under pressure due to the CPI reading, while pure momentum stocks in cruise lines are cranking higher. I am trying to make sense of it all - because the real economy isn’t thrilled with the report - but the speculative momentum stocks are moving higher. Ugh…

This is an unusual start to the day, with our reading still in a warning phase. That said, the S&P 500 is above the 20-day moving average thanks primarily to LOW VOLUMES, which is influenced by capital flowing into Mega Cap stocks like Alphabet (GOOGL) and Tesla (TSLA). We’re at a relative volume of 0.82x.

Volume can slightly throw off a reading, but there is clear crowding in the bigger names, while smaller names lead to negative readings. For these reasons, as in 2021, we must rely on real-time MACD, RSI, and MFI analysis.

Plus, we held above the 20-day moving average.

While technology is still positive, weakness in the sector is what to watch.

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