The last couple of days have been testing our patience. The 61.8% retracement of Wave 1 has been surpassed and the SPX futures are making marginally new retracement highs. I feel compelled to say that the cautionary levels for SPX is the 78.6% retracement at 2685.00.

ZeroHedge observes, “As we previewed earlier this week, only one number matters for the markets - both stocks and bonds - this week, and it will be released at 8:30am this morning, when the BLS unveils the January CPI print, dubbed by various trading desks as "the most important CPI print ever", with every trader, both carbon and semiconductor based, focusing only on whether core CPI comes at 0.2% as expected, or higher. If it's the latter, TSY yields will spike - conventional wisdom goes - while the second leg of the equity rout could be unleashed. Inversely, if the core CPI disappoints, we may see a sharp move lower in 10Y yields and the dollar, while stocks prepare to retest all time highs.”

TNX futures have been drifting marginally lower this morning so far. However, everything can change at 8:30 am. Both the Wave structure and Cycles Model call for a probe higher…

I will be observing the Ash Wednesday tradition this morning and will be back near the open of the market.

VIX futures made a new Wave [ii] low at 22.81 this morning. The Wave structure remains intact, suggesting the reversal higher is still imminent.

Regards,

Tony

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