S&P 500 invalidated the key bull flag thesis laid out in yesterday‘s chart section, and both 3,815 and low 3,770s supports gave way. I think markets are positioning for too hot CPI beating expectations, which results in a boat inordinately tilted the risk-off way, positioned for still accelerating inflation beyond the consensus 7.9% YoY. True, I‘m looking for a sticky figure likewise, but would be happy about 8.1% which still has the potential to generate some relief for risk-on assets.

In such a tight trading range pre-CPI, it‘s key to think in terms of upside and downside risks with their probabilities and advance clues – those to the upside on the CPI release prevail, no matter that I‘m not wildly optimistic about Nov, and I refuse the notion of Fed pivot or even pause as being anyhow near, not even just a couple of months away, no. This is what it means for the short-term S&P 500 path. Crucially, I‘m looking for a bright Dec and not a great Nov monthly candle. As for today, these bullish cues simply can‘t be ignored in delivering a surprise to the sellers.

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Let‘s move right into the charts (all courtesy of www.stockcharts.com).
 

S&P 500 and Nasdaq Outlook

I‘m leaning towards the thesis that we haven‘t seen a genuine reversal yesterday.

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