S&P 500 and especially bonds closed on a cautious basis yesterday, clearly positioned for a hawkish surprise in the run-up to the CPI release. While the headline delivered solidly on disinflation expectations, the core didn‘t do so really.

The key move that‘s set to overpower the bears as a bare minimum for today, is the reversal in tightening odds, even if for Jun only. The jubilation is set to prevail today. Right or wrong, the Fed is being forced by markets to back off, and as a side effect that takes some heat off the continued deposits flight when T-Bill rates go down.

The behavior of the short end of the curve is key for today (and will be reflected in USD) – and I‘ll be foremost commenting on the intraday moves live on Twitter, including the opening dip – this is one of such days when I also open today‘s analysis for free.

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Let‘s move right into the charts (all courtesy of www.stockcharts.com) – today’s full scale article contain 6 of them.
 

S&P 500 and Nasdaq Outlook

With odds of a day in the black this high, it would be key to see how KRE, XLF, XLB and XLI with IWM kick in again, plus the total volume. Bears can‘t think about 4,136, and low 4,150s close would be a huge and unexpected success.

Rather, have your eyes on 4,177 followed by the key 4,188 level – and of course presence or absence of market breadth relative improvements. Again, the short end of the curve – with a focus on 3m foremost – holds the key.
 

Gold, Silver, and Miners

Precious metals would be the first canary (together with USD) pointing to any significant reversal of Fed tightening bets. Are they done, are they not – this is where it would show up first. Not in copper that still has to keep above $3.78 first, and odds are it would following today – and the same goes for crude oil reclaiming $73.

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