The Battle At 3590

Bank of England said on Tuesday that British pension funds and other investors hit hard by a slump in bond prices had just three days left to fix their problems before the central bank would withdraw support.

The SPX which had Pinocchioed our idealized resistance at 3629 dove to down 40 before rebounding somewhat.

Be that as it may, the SPX closed virtually directly on the key square of 359 (3590) measuring from the ATH.

The cat and mouse game at 3590 continues.

As the slide in stocks and bonds has continued globally, the strain on the world’s financial systems has been increasing geometrically.

Margin calls are pressuring stocks and we should soon see what impact a meaningful close below 3590 will have on traders and fund managers.

Inflation continues to be the focus for traders, managers, the media, and the Fed.

And for the next two days, the CPI coming today at 8:30 and the PPI coming in at 9:30 on Thursday will likely dominate the tape.

We cannot know the numbers in advance or how they will compare to traders' expectations.

If the numbers come in cooler than feared, it could trigger a sharp short-term rally from this key SPX level.

If they come in hotter, this could trigger more intense selling pressure.

In sum, yesterday we tweeted to watch the 174 level on SMH the semiconductor index and it was hit followed by a bounce.

This morning it is up 2 points to 178.75 and giving a tailwind to the tape.