Tuesday’s trade was interesting to say the least. The CPI data was released and came out better than expectations showing that on a consumer level inflation declined to 7.1% – while a relief for the market and producing a huge rally – the number itself is still 5.1% above the FED’s target – so while we all want to celebrate and return to the “good old days” – I would suggest keeping your powder dry for a bit longer.
The ES and NQ initially lifted off after the CPI release – with the ES climbing over 100 points and the NQ over 400 — those levels though proved to be the highs with both markets declining substantially off the highs. The DOW and the SPX did go negative briefly but both finished the day higher. I have not changed the wave count from the preferred count labeled at the moment. I have made a small change in the labeling moving the “X” wave out a bit and relabeling the next Minor A and Minor B waves as indicated on the charts. This suggests that the rally off of Friday’s closing lows is the second Minor C wave to complete the Intermediate wave 2, which may be complete at today’s highs. I’m not calling yet due to the fact that tomorrow is FED day.
Again, tomorrow the FED will announce their decision at 2 PM EST with Powell stepping up to the mic at 2:30 PM EST. Thursday the Jobless Claims, Philly Fed Manufacturing Index, Retail Sales data will be released at 8:30 AM EST and Industrial production data will be released at 9:15 AM EST. Friday is a quadruple expiration. So still the possibilities for lots of fireworks.