It's All About the CPI Report

We have $ in our pocket from Monday, so let's go easy.

Technical Edge — 

• NYSE Breadth: 75% Upside Volume

• Advance/Decline: 75% Advance 

• VIX: ~$20.50

We were very fortunate yesterday to have a solid approach to the session. We went daily-up right off the open as the S&P ran into our upside targets. That let us put a few bucks in our pocket to start the week and did so ahead of a big economic report with the CPI print.

Now today is shaping up in a binary way. Either inflation is in-line or lower (and thus the Fed is closer to the brake pedal) or it’s higher (and thus higher rates are in play). 

“In-line” defaults to the bulls’ favor, because that’s who has control of the current trend. That said, a hot report could put last week's lows in play in a hurry. 

As for the individual stock trades, don’t be afraid to trim NVDA and/or AMD as they are making a nice pre-earnings push. 

S&P 500 — ES 

We traded yesterday’s setup really well, which is nice because today’s approach is much harder. The algos are going to fly and this binary situation makes it tough to approach, so let’s highlight a few levels on each side. 

On the upside, 4175 to 4180 is key, but I doubt that level is an issue given how close we are to that range. Instead, last week’s high of 4188 and the February high near 4210 are more interesting on the upside. 

If we clear those levels and don’t reverse back down, 4300 to 4310 could be in play next. 

On the downside, 4085, then 4060 to 4070 are key support levels. A break of last week’s low is the major risk for bulls at this moment.