Stocks sold off and yields climbed after the Bureau of Labor Statistics’ January Consumer Price Index (CPI) showed the biggest annual jump in inflation since 1982.

The surging 7.5% jump in prices escalated calls for the Federal Reserve to raise interest rates more aggressively than previously expected and begin rolling assets off its balance sheet, in moves that would curb liquidity in the financial system and dampen soaring consumer demand and prices. St. Louis Federal Reserve President James Bullard told Bloomberg News on Thursday he wanted to see interest rates be raised by a full percentage by July and start the Fed’s balance sheet run-off process in the second quarter, in one of the most hawkish paths so far telegraphed by a Fed official.

On Tuesday, for the S&P 500 we said ‘Watch the 4600 level as near-term resistance as our model sees this as a key short-term resistance level and if we can’t push past this level we could see the market start to break down with a potential near-term low in the next 6 weeks.’

So far that 4600 has held, so the scenario laid out on Tuesday is still very valid.

This is a chart of the VanEck Semiconductor ETF and it is suggesting that we are at a potential key inflection point. As we can see, this ETF is in a rising wedge pattern where both the upper level (red lines) and lower level (green lines) have acted a key short-term resistance and support levels. As the wedge narrows, one of these levels is going to give way. We are now testing the lower level, and if it breaks then the high today may have been the top for a few weeks at least.

On the other hand, if SMH bounces off this support level, then we could see one more test of the upper level of the wedge.

The Canadian TSX has been one of the best performing indexes in the world lately and is within a hair of a new all-time high.

Stay tuned!

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Stay tuned!

Stock turned lower to close a choppy session at the start of another busy week for corporate earnings and fresh economic data, as investors continue to assess the Federal Reserve’s path forward for monetary policy.

The S&P 500 declined after posting its best weekly rise of the year last week. The Dow traded little changed, and the Nasdaq underperformed as technology shares fell anew.

Looking at the S&P 500 chart, we can see that it is in a near-term downtrend channel and needs to break above near-term resistance at 4600 to decisively break out of that channel. Ultimately, the S&P 500 needs to break through to a new high to confirm the resumption of the bull market. Near-term support sits at 4300 and key support is the 4200 level. A break below that 4200 level opens the door for a significant decline.

Tech stocks were down led by Meta (Facebook) again. Meta is now down over 41% from its September high.  At the bottom of the chart, we can see that based on RSI, Meta is now oversold. If you are looking to dip your toe in here understand the this is like a falling knife, you need to wait till you see it start to turn higher.

Gold was up 14.00 today, and is slowly trying to work its way to test near-term resistance of 1830, and then key support at 1870. We are in a seasonal period of strength for gold, but it has had a tough time trying to break out of this wedge pattern it has been in since last May.

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Stay tuned!