Can CPI data fluctuate market by 15%?Yes AZL lost 1 pip to...

Can CPI data fluctuate market by 15%?

Yes AZL lost 1 pip to finish at 6.7c. Our volume was average, just over 14m shares traded. So we were not able to hold 6.8 today, but 6.7 is within statistical range, so lets hope general markets/LI sector rebounds and we move up from here.

ASX Li stocks were again looking weak. Of the 54 stocks that I track, average loss was 2% - we also lost 2% yesterday. Many ASX Li stocks are reaching very critical levels which they need to hold, lets hope it happens.

Overnight US Li stocks were mixed, though many finished in green. Average increase would be around 1%.

What next:
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Yesterday US markets had a big bounce, there was a chance of a green after a series of reds, but the rise percent was also good. SP 500 rose nearly 1.5% and reached 3990. ASX was in green all day but only by a small margin of around 0.3%. Most resource stocks though were not buying the rise, a small rise or a fall - no big gains

So although SP 500 did gain, why did resource stocks not gain much? It looks like the rally in US Indices was led by DOW and mainly risk-off sectors did well. Resource stocks are risk-on and hence they did not gain much or fell. Many resource stocks are looking quite weak. They look so bruised as if they require a very big boost to regain confidence - its not looking healthy but lets hope we do get some good economic data to move us up.

Yesterday the SP 500 gained a lot, one would expect Volatility Index to fall. Instead it rose nearly 10%, as if a steep decline in SP 500 had happened. A fall of nearly 10% in VIX happens on average once every 5 years or so, and it was 13th highest fall ever - 2022 has been really a strange year. The Volatility is due to upcoming events around CPI, FOMC and Options Expiry - all this week.
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Tonight crucial CPI data. It is expected to fall from last month. But for market, its not important that it falls. Its all about what is expected. Last month was 7.7. Initial forecast was 7.6 but now consensus is 7.3. So it all revolves around this number 7.3. Anything above 7.3, most likely we go down. How much important is this CPI data? According to JP Morgan analysis, we can see a fall up to 5% in US indices if data is not good, or a gain up to 10% if the data is very good. Yes, that big numbers are being talked about.

Lead indicators were not favourable yesterday - Yields rose, Dollar Index rose and Volatility Index VIX too rose. Still SP 500 gained 1.5%. Strange things are going on - some traps are being set for big rise or fall? Possible bear trap - all bears may short looking at Lead indicators and CPI data comes in good and we have a big rally - that's the good path, lets leave out the other direction.

Tonight after CPI data, tomorrow we have FOMC minutes and Powell speaking. Even after tonight, things could again change tomorrow. Then on Friday Options Expiry - Trillions of dollars are again in play, and markets are supposed to be manipulated a lot because of the money involved. The VIX rising was attributed to this volatility that lies ahead in the next few days.

So if we fall, SP 500 initially needs to hold 3900, failing which 3810 and next 3750 - a big gap sitting here. Many feel on a very bad CPI data we may reach there. On the up we need to cross 4000 where we are nearly there, then 4050/4100 and finally around 4230 - this number could be achieved on a very good CPI number. If we reach 4230, it may be very bullish.
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So what will happen tonight? Its another binary event tonight, so unpredictable. CPI data before market opens. Anything can happen. A good number below 7.3 should create a rally - a Santa rally that are many are waiting for. Will that happen? Lets hope so. All the best.