Market Briefing For Wednesday, February 14

Image: The Inger Letter

'Drama' - exceeded the CPI report's merit on Tuesday, however finally it was a sufficient trigger for the February 'correction' to at least commence.

If I took a 'scan' of the market, I'd say that the smaller stocks failed to elicit underlying support as the big-caps cracked. I think that's a function of the catch-up bifurcated nature of things, and more of a follow-the-leaders kind of market, though most have not followed anything.

Core CPI was never going to come down much food and especially fuel have not declined. And people keep talking of decline, without nothing nobody has suggested declining prices, just prices going up at a slower pace. And they're likely to see that in the PPI as well as the (possibly tamer) PCE next week, so while we are still overbought on indicators, it might short-circuit the shakeout.

So a 'cautionary warning' might be to those chasing the S&P downside 'after' a fairly stubborn early February (narrow breadth) advance led by mega-caps, as opined for a couple weeks, was headed toward a shakeout, not disaster.

A couple charts to 'scan' and note that S&P futures are actually 'up' 2. This infers possibly too many chomping-at-the-bit to get 'in' this market, and that might stun folks if Wednesday sticks it to sellers a bit. It's not justified, there 'ought' to be more decline in a retreat phase, but this is an Election Year and a 'special' market, so beware of a trap that snares all the shorts prematurely and has traders aghast at the capacity to recover fast.

Again that's not what I want to see for an evolution of S&P here, but one is aware of it. It doesn't matter what would be healthier, just recognize what this market has the capability of doing. And imagine if in the middle of this you get a ceasefire too. Things can happen, although firm Oil prices aren't hinting at that as yet.


More By This Author:

Market Briefing For Monday, February 12
Market Briefing For Thursday, February 8
Market Briefing For Wednesday, February 7

This is an excerpt from Gene Inger's Daily Briefing, which typically includes one or two videos as well as more charts and analyses. You can follow Gene on Twitter  more

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