Markets rally on CPI data, but remain range bound
Today's gains reversed what was looking like a new leg lower, and the degree of today's advance was no doubt supported by short covering coming off yesterday's preferred strategy. I wouldn't read too much into the CPI data - news is used to fit the narrative - and many of the indices are still locked inside trading ranges which could go either way.
The S&P managed to make its way past the most recent swing high as it looks to push towards its 200-day MA. Technicals are improving, although On-Balance-Volume retains its 'sell' signal. If this buying is real, the S&P should be the index to benefit.
The Nasdaq was not as fortunate as the S&P, although it did enjoy an accumulation day despite remaining below resistance defined by the last swing high. There was a new MACD trigger 'buy' to go with the ADX trigger - although Stochastics and On-Balance-Volume remain bearish. The index has been underperforming the S&P for a long time, but this relationship saw a sharp uptick in the Nasdaq's favor, although it hasn't yet crossed the moving average trigger line.
The Russell 2000 made it back to its 200-day MA on higher volume accumulation. While it hasn't cleared the last swing high marked by the black candlestick, it did manage to edge a close above its 200-day MA. Technicals are net positive, although the index is losing some relative ground to peer indices.
You've now read my opinion, next read Douglas' blog.
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