Setup Day

CPI Number Tomorrow

Today is a setup day for tomorrow’s CPI number which for some reason seems to be taking on more significance than usual.  That is no doubt due to the belief by many traders, especially Hedge Funds, that inflation and higher interest rates are a sure thing as the year progresses. I am not a believer in the high growth story, there are too many  headwinds and much of the growth seen in the past three months is inventory building in the anticipation of higher growth.  Around here, the Chicago area, all I have seen for the past three years is hyper commercial construction. Everyone seems to want to beat the higher rates coming down the pipe.  High rise retirement homes, new outdoor malls, all while old malls set empty with for rent signs.  There will not be any growth in this area in the next few years.

Trader Positions

It will be interesting to see how the market handles the number.  Short term stock traders have bad position averages, they have been selling too low, and buying too high.  With hedge funds heavily short T-Bonds they have to make there trade work now.

Trading

There is a chance that the S&P will test the 2716 level today or early tomorrow, but this will be a last chance to get a good sell off before the next sell wave starts.

Gold is showing a little interest in moving higher, but the run really will not start before the wheels come off stocks.

Posted at 8:27 AM CST 2/13/18