Yesterdays inflation numbers helped lift the Nasdaq to yet another all time record high. The move was short lived, as prices rolled over and finished the session near the lows of the day.
The Nasdaq ended the day over 1% lower. The S&P500 and Dow both ended down over .6%. This is a market that still has plenty of excuses for downside. And while the inflation data gave investors a sigh of relief, the firing of Trumps Secretary of State helped fuel some of the downside action. With over 9 years under its belt, this bull market has shown that the excuses to sell end up being great opportunities to buy. For a short term trader the question is when?
Overnight futures are rallying off the lows. Heading into todays session the break of this S&P500 futures flag will likely dictate the action.
The VIX this morning was painted yet again after PPI and Retail sales data:
We have had many paints of the VIX over the years, and all of the paints end up getting filled down the road, with most getting filled days or weeks later. With today's paint and the one from last week, that has yet to get filled, if/when these ultimately get filled the market will be at higher prices.
Shorter term lets keep an eye on that morning flag. Also in 2018 intra-day H&S patterns have worked well for a downside signal. The intra-day inverse H&S has also worked well.
Yesterdays early H&S pattern gave way to a nasty pull back.
It is also monthly options expiration which usually has a bullish bias. With the recent goldilocks jobs report, subdued inflation, and the markets penchant for keeping downside at bay after one day, the odds of an upside move today are very good. However lets watch that morning flag for confirmation.
Here is it again on a shorter term chart:
See you in the chat room.