The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Summer’s over
Attacks on Iranian tankers moved the crude market higher and Treasury yields climbed as well, whether in sympathy or coincidently is unclear. Both those markets pressured stocks lower and the S&P opened down about 10 points. The index quickly fell in initial trading and spent the bulk of the day in the down 30 to 40 point range. Despite the unofficial end of summer trading, capital flow remains light, hitting 90% today.
Inflation and the September decision from the Fed are front-and-center issues for the market. The next PPI (+5.3% est vs +4.7% prior) and CPI (+3.4% est vs +3.4% prior) data release Thursday and Friday respectively. Current Fed hike probabilities are 60%. There’s a lot riding on those data so perhaps the lack of capital flow today is explained by investors waiting.
From a charting standpoint, the bulls’ brief advantage is gone and short-term trading is likely rangebound. The S&P remains in the consolidation range from early August. An important downside level is 7598 and an important upside one is 7817. Without a catalyst, we will likely stay within these levels. Inflation data seems to be the catalyst around the corner and it should kick the index strongly to test one of them and give us some technical direction.
If the news can be relatively tame for a day or so, Thursday morning’s PPI should be the moment of truth.
See you tomorrow.
-Mike
Visdom Market Commentary
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