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I’ll start off with this item: JP Morgan laid out in great detail precisely how likely various CPI results would be this morning and what the consequences of the number would be for equities. Kindly direct your attention to the highlighted portion.

As you surely know by now, the CPI wasn’t above 0.4%, or at the consensus 0.3%. The VERY lowest professional prediction was 0.2%. I say again, that was the EXTREME LOWEST prediction.

The result, instead, was……..0.1%. HALF the lowest price. Not just “below 0.25%” but so far below that people couldn’t imagine it.

Now, to be clear, according to JP Morgan, they gave the likelihood of any number below 0.25% a 5% likelihood and, should it come to pass, an S&P gain of 2% to 2.5%. I suppose if you told them 0.1% was the true number, they would have predicted a 4%-5% rise in the S&P 500.

The actual result? Well, the day isn’t over, but as of this composition, the S&P 500 futures are up 0.09%.

Thus, JP Morgan, one of the oldest and most gigantic financial institutions on the planet, couldn’t have been more wrong if they had printed the entire report on pink construction paper and put heart decals all over it. Dead, dead, wrong.

Zerohedge, of course, the mouthpiece of big investment banks, fell all over themselves publishing their predictions (to paying members only, of course, since, you know, it’s such potent information).

Anyway.

I say again, the day isn’t over, so God knows I’m not about to take a victory lap, but I will at least say this: watching the /RTY absolutely explode higher when the CPI hit was like a knitting needle through the gut. Interestingly, though, the green line I keep yacking about served as beautiful resistance, and for a few moments, the ENTIRELY of the spike had totally vanished!

As of right now the /RTY is still up one third of a percent, which sucks, but hell, I’ll take it, since that’s a mere one-fifth what it was with the initial reaction!!

My sense is that, at the moment, we’re probably at the lower bound of what the /RTY is going to do, and a bounce of some kind is probably going to ensue. We’re range-bound at this point with powerful support in the form of the Fibonacci below and the aforementioned green line above.

The point is simply: this morning isn’t great, but it could have been a LOT worse.

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