Just sent clients the 350th edition of Turning Points going over the setup for the week ahead, along with the opportunities that will emerge as a result. This is a fascinating week coming up on a number of levels.
As fortune would dictate, we are going into a pivotal week with CPI, PPI and Fed while sitting at an even more pivotal price level.
In case you haven't been following along, I have been discussing the 4300 level for the SPX for a number of months now on both Twitter and here. It's THE most important technical point in the markets, dictating to a large degree market behavior not just for the rest of Q2, but well into Q3, and perhaps the remainder of 2023.
We are encountering this price level just as volatility is set to expand this coming week with CPI, PPI, the Fed and Powell.
Therein lies the problem for the markets.
Unless this coming week is unidirectional to the upside, with the SPX closing at 4400+, there are little pathways to further upside for June.
In other words, there is a very high probability that this week will mark a short-term peak for the SPX given all the factors that are working to create a reversal here.
The only question is whether that short-term peak will turn into something more.
As of now, I have a 2-3 week peak, lasting into the first week of July at the most before the bull makes it back into Q2 earnings. However, given the structure of the decline that is to come, that scenario can change very quickly.
The market has sucked in enough participants now that it may just unleash some real pain for sometime to come.
I don't necessarily favor this scenario, however, much like I have been doing for most of this year, I am keeping an open mind as to what may lie ahead.
Bottomline: Contrary to what most everyone is expecting, there are very few pathways to a bullish outcome this week. The markets will suck investors into thinking otherwise. Don't fall for it. Truth in price comes from Thursday - Friday. How we close the week matters more than anything else.
Guard your profits.
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