Risk On

“The nature of the universe is such that ends can never justify the means. On the contrary, the means always determine the end.”
-Aldous Huxley

Markets closed sharply higher yesterday in hopes that this morning’s CPI report at 8:30 will  further indicate moderating inflation.

Breadth was only moderate though after a weak showing on Friday.

The gain in the SPX was largely on the back of MSFT’s heavy weight on the index.

After two DJIA/SPX advances, the Summation Index remains in decline as the chart below depicts.

In addition to the pronounced divergence, according to the NAAIM,  asset managers, under-positioned in early January, are now chasing stocks higher for the highest long positioning exposure since January 2022.

With the SPX 700 points below its January 2022 all-time high, that’s some divergence as well.

This morning’s report and reaction will be crucial. There is no point in guessing what will be reported.

I’ll comment again in the morning after the opening.

We know the turning point at hand and are mindful that the market is a function not of reality, but timing.

We must also be mindful that this turning point may be an acceleration higher.

But, that will be determined not necessarily by the immediate response to today’s CPI, but by the close.