The CPI Report Is All That Matters Today

The inflation report is the key driver for this week, but also the quarter.

Technical Edge — 

• NYSE Breadth: 86% Upside Volume (!)

• NASDAQ Breadth: 72% Upside Volume 

• VIX: ~$23.75

Game Plan: Bonds, Dollar S&P, Nasdaq

All I will say is, the CPI report is going to drive the markets today. There’s no other way to put it. 

Friday’s 90%+ upside breadth day was followed by an 86% upside day on Monday and came after an 80%+ upside day on Wednesday. That’s a pretty impressive thrust. 

Mapping out levels ahead of a huge event is hard, but this is what I have circled on my charts. 

Bonds

I just can’t help but notice the bonds. Yesterday, bonds reversed their early gains and actually made new weekly and year-to-date lows. While the S&P screams higher, no one seems to be talking about the bonds, which have all but led the way this year. 

Is this a case of “smart money” telling us what’s next? After all, the fall in bonds preceded the fall in stocks earlier this month and the bottom earlier this summer. Or is this a scenario where we’re seeing at a break in correlation between bonds and stocks?

Today may go a long way in helping us answer that. 

Dollar