SPX Daily neutral with a bearish bias. Recommended ratio: 35% SPX, 65% Cash. *Money markets continue struggling to find a bottom amidst high and rising global inflation. CPI report comes out tomorrow (07/13) at 830am (EST), market consensus is around 8.8% (8.6%-8.9% range); if it comes in on the high end or higher, a sell-off will likely ensue. The next FOMC meeting is on 07/26-07/27 and the next FFR rate hike will be released in the Fed statement at 2pm (EST) on 07/27. Richmond Fed President Thomas Barkin stated today that he thinks that a 50-75bps rate hike this month is "reasonable" but cautioned against going too far and "inadvertently breaking something". The San Francisco Federal Reserve published research last month showing that demand is only 1/3 responsible for inflation and that supply chain disruptions are responsible for about 1/2 of inflation; this implies that the Fed can only do so much to ring in inflation and that a lot of it depends on Russia's attack on Ukraine and China's 'Zero Covid Policy'. Until inflation is tamed, it's reasonable to expect for more recessionary fears to mount heading into the second half of the year, especially with the risk of the global geopolitical situation (and therefore supply chains) getting worse.* Price is currently trending down at $3800 after being rejected by the lower trendline of the descending channel from August 2021 at $3938 minor resistance and is technically still testing the uptrend line from 06/16/22 as support. Volume remains Moderate and has favored sellers for two consecutive sessions now. Parabolic SAR flips bearish at $3734, this margin is mildly bearish. RSI is currently trending down at 44 with no signs of trough formation after forming a Double Top just below 53 resistance, the next support is at 38. Stochastic remains bearish for a second consecutive session and is currently testing 76 support as it falls out of the 'bullish autobahn zone'. MACD remains bullish and is currently forming a soft peak as it tests the uptrend line from March 2020 as resistance a little above -44 resistance. ADX is currently trending sideways and is beginning to form a soft trough at 20 as Price is trending back down, this is mildly bearish; if ADX is able to bounce here as Price continues to break down, this would be bearish. If Price is able to bounce here then it will likely retest the lower trendline of the descending channel from August 2021 at $3938 minor resistance. However, if Price breaks down out of the uptrend line from 06/16/22, the next likely target would be a retest of $3707 minor support (and potentially lower). Mental Stop Loss: (two consecutive closes above) $3938.
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