None of this is a coincidence with CPI, PPI and Fed minutes being imminent:
SPX 4109
BTC 30300
10 year yields 3.4%
DXY nearing 100
VIX below 20
All of these key indicators of capital flows are telling us that something has indeed flipped in recent weeks. While most are still stuck in a narrative of recession, bank failures, stagflation and geopolitical turmoil, the market is focusing on something else entirely.
It's not our job to be psychics as investors, pinpointing what that "something else" could be.
Our job as investors is to recognize when price momentum and structure is of the type that is significant enough that it dictates shutting down all emotional traits associated with following group think, and following the smoke signals that price is clearly emitting in the near distance.
If you will recall, in mid-January with the SPX at 4000, I detailed how investors were focused on the incorrect price levels around 4000, with 4100-4200 being the true point of interest for the markets.
4200 came in early February, stopping the markets cold in their tracks. Investors had their eye on the incorrect target.
Now here we are again, the same mistake is being made.
The SPX has a point of interest at 4300, constituting either resistance (down) or an acceleration zone (up).
4100-4200 no longer matters. The goalposts have been moved.
With that said, for the remainder of this week investors are contending with a bunch of scary economic events (CPI, PPI and Fed minutes) along with perceived technical resistance areas (4100-4200) that carry little weight.
This combination of factors will allow for the markets to quickly move up for the remainder of this week on the back of economic data that will reignite discussions of a dovish pivot.
4300 tells us what the next steps will be.
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