Monday, July 12, 2021

SPX and Inflation Updates

The Wall Street Journal just reported that a plurality of economists now expect:

a widely followed measure of inflation, which excludes volatile food and energy components, to be up 3.2% in the fourth quarter of 2021 from a year before. They forecast the annual rise to recede to slightly less than 2.3% a year in 2022 and 2023. That would mean an average annual increase of 2.58% from 2021 through 2023, putting inflation at levels last seen in 1993.

Of course, we've been talking about that here (and on the forums) for a while now... so [insert Bruce Willis gif here... wait, I can actually do that!]


Since last update, SPX confirmed the expectation that the decline was "just a fourth wave," by making a new all-time high:

Bigger picture, no change, except to note that SPX is about back to the trend line that caused it trouble last time.  If it were to sustain a breakout over, that might suggest an extended fifth unfolding.  But if it doesn't and meets resistance here for a time, then the market continues to reserve the right for an extended fifth later.

In conclusion, SPX could form a more complex 4, but if it doesn't, then it likely needs some 4/5 unwinds higher yet.  Thus we could see a pause/drop from current resistance over the near term (likely either a micro 4 or the larger, more complex 4), but ultimately, SPX still looks pointed higher for the time being.  Trade safe.

1 comment:

  1. thanks for the warning about the "extended fifth". Soooo very TRUE.