Just because a sea is calm doesn’t mean that you can believe in its stillness.

Anthony T. Hincks

Wanted to take a second to pen a quick update after the CPI release today. I will withhold any unnecessary suspense if you haven’t seen the number, it was truly best case, we printed a full -1%:

So here is what that latest number looks like against the backdrop of the rate hikes. We have dropped 2% in literally 2 months?

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In response, everything caught a bid today and I do mean everything. Stocks, bonds, oil, gold and complacency, about the only thing dropping was the VIX now back under 14. If it weren’t for earnings season around the corner, as in this Friday, a 10 handle wouldn’t surprise me at this point.

With bonds heading higher, yields across the board took a breather visible by the tick down:

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on balance

Several days ago I took the liberty to draw what I felt could be a SPY sideways consolidation zone for the summer months ahead:

So a couple of observations to be made…

We gapped up today post CPI, held and closed above the rising channel. 450 is suddenly within reach. The bottom of this “zone” is 420, nothing scientific or special about that number, I chose it simply because it lies below an unfilled gap at 422 (the double line).

That is the range I will be watching as earnings season unfolds. If we continue higher, and break 450, I will simply tip my hat and grab more popcorn.

It’s been a good year so I am comfortable sitting on a large % cash earning 4.75% right now on the sidelines. I have no reason to chase these moves, I will let opportunity properly introduce itself in due time.

If Q2 earnings prove to be as resilient as the US consumer, who knows? We may continue to melt higher. Amazon prime day stats should be available tomorrow.

I will say it again , the longer we go without a pullback, the larger/fiercer it may be when it does occur…

Don’t tell that to Mr. Market though, for now he’s all unicorns and rainbows, palm trees and pillows.

You don’t throw a compass overboard because the ocean is calm.

Matshona Dhliwayo