Here is the NDX to best encapsulate today:
An overall inconsequential day technically. Volume across the board on the Nasdaq was well below average. The volume for the NDX was in line with Thanksgiving week. In other words, sellers couldn't muster up anything more than holiday week volume on the sell side today.
The Nasdaq and S&P both continue to consolidate in what has become a very attractive continuation pattern on the upside with this multi-week consolidation.
NDX is setting up for a move to 13,000 or thereabouts in fairly short order.
More importantly, what the market has done since the October lows is to demonstrate this it is more concerned with the forward outlook for inflation and rates, as opposed to the constant barrage of Fed talk.
Further upside for equities and downside for rates is dependent on softer inflation data, which is a high probability in the days/weeks/months ahead. I expect investors will understand this after the PCE data on Thursday and the CPI due on the 13th.
The combination of softer economic data, softer inflation data and a Fed that is slowing the pace of their hikes will be a potent recipe for significantly lower rates, translating to higher equity prices, especially in growth.
As should be expected in the current state of bearish psychosis, it just took one bad day and investors are quickly jumping aboard the "this is a replay of the August top" bandwagon.
Two stark differences that are not being mentioned, however.
In August we did not have (1) Rates rolling over hard and/or (2) USD cratering.
Today we have both.
This is a structural change in the very foundation of the inflation argument. The last piece to fall in line will be equities.
Bear in mind, with numerous Fed governors remaining hawkish today, yields were unchanged on the day.
In other words, yields don't care about Fed talk any longer and neither should you, as an investor.
That is all for now.
Goodnight.
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