 Hey everyone, this is Mike Kramer on my capital today is Tuesday December 12th. That's around 6 30 New York time. So CPI today did come in hotter than expected 0.1 on the month over month, which was actually what the inflation swaps. We were talking about last night. We're pricing for Otherwise everything else came in in line And now tomorrow we're gonna get PPI working for it to be flat month over month X food and energy up 0.2 X food and energy trade up 0.2 final demand up one X food and energy up 2.2 X food and energy and trade up 2.8% and then of course at 2 o'clock. We're gonna get the FOMC meeting Following the CPI report. It looks like there was maybe some very minor changes in how the market was pricing Rate cuts for next year. I mean Basically at this point market is projecting about a 4.3 percent Fed funds rate by December and this has really been the story of the of the market versus the Fed for the last two years with the market always Anticipating more rate cuts and or less rate hikes and what the Fed is projecting and more rate cuts and what the Fed is signaling and The narrative just hasn't changed So I mean in a lot of ways tomorrow will become a fairly big day And I'll just deviate from the usual script for just to point out this one index. I follow very closely It's the CDx high yield CD si Index and it measures the spreads Basically, I use this as a financial conditions indicator sort of in real time and Why it's important is because we can you know clearly see from just a purely technical Standpoint we're at the very low end of the range And in fact you could already start to argue that you know, this is starting to already show signs of breaking support Now clearly if this were to happen This would be an indication that financial conditions are really easing and going back to levels last seen in 2021 which In all honesty wouldn't I don't think be supportive of Fed policy And would probably lead to a risk on rally further than what we've already had Potentially significantly further given how much easing there would be there And what I do is I take the S&P 500 and I just overlay the current earnings yield With this index and it really gives you a very good idea of why why tomorrow's Fed meeting is so critical from the standpoint of the Fed trying to keep control of the narrative because you know if you know, you see a Fed that sort of Gives into the market a little bit and signals, you know rate cuts next year This could result in in these conditions really easing Significantly and very quickly remember, you know, it was in November where the Fed was bringing up and talking about it was at November 1st meeting the Fed was talking about, you know How much the financial conditions have tightened and they want to watch them and you can see what's happened inside of six weeks the S&P 500 is rallied dramatically and You've seen Treasury yields move down and you've seen credit financial conditions really ease So unless the Fed really wants to lose complete control over this whole, you know market It would really suggest that they have to kind of hold the line here and and need to forcibly Push back against the market Because I think if they fail to do that it will you know bring about a second round of Inflation and so I think the Fed is fearful of that and I think it should be reason enough for them to deliver a hawkish message tomorrow and and we'll have to just kind of wait and see You know as we spoke about over the shorter term though you know yesterday we were looking at the yen and We had talked about you know the general downtrend in the end because it looked like we had come up to this level of resistance We had tested this 10-day exponential moving average and to this point we've fallen and Again, the yen is going to start probably separating from the other currencies Just because I think we're at a different part of the cycle with the BOJ at potentially the beginning of a rate-hiking cycle While the rest of the world is basically at the end of the rate-hiking cycle and on some cases on the on the cusp of potentially starting a rate-cutting cycle And and so I think you're going to start seeing the yen potentially separate from other currencies and you know at least based on this it looks like Very clearly and very easily. I would be looking for resistance at this 146 and a quarter 10-day exponential moving average number and I would be looking for support somewhere in this 14490 region. I think if you break this 14490 region, it's going to set up lower lower lows on the on the end in fact when you look at the euro and you can see that This is also showing, you know similar sorts of signs where you're seeing the end strengthening versus the euro as well and Again, you can see the euro yen is sitting on an important level Really in an important zone of support around this 155 to 157 range and clearly if this were to break this 155-156 bound that would certainly set up a much bigger move lower and again I think it supports the idea that the yen may begin to strengthen Separately and outside of what the rest of the currency pairs are doing When we look at the euro versus the dollar today the euro actually rebounded a little bit and we came right up to this 10-day exponential moving average Which is now Serving as a resistance level You can see that had been support on the way up and now that's reversed and now become resistant So again, it looks like to me resistance would remain at that level around 108 or so While your downsize support is somewhere around this trend line around 107 and a half if you get a Fed That's more hawkish than what the market is expecting I would expect the euro to probably work down towards this 107 30 region and Potentially break it and a lot of that will be dependent upon what the ECB says on on Thursday When we look at the pound versus the dollar, it's still very much the same story 10-day exponential moving average serving as resistance for it I still think that continues to be the main case You can see that we had a big uptrend in momentum that hasn't changed again You get a more hawkish Fed tomorrow the big level is going to be this 125-14 if that breaks that's going to result in I think much further downside here for the pound while I think your resistance right now is still around this level may be as high as 126 23 when we just look at the dollar index just to try to give us a little more context Again, right now it looks like the 10-day exponential moving average as one would expect is serving as support For the dollar when we look at it more in an intraday chart You can say that there's still potentially an inverse head and shoulders here But you know, we really need to see the dollar start turning higher for this pattern to work Otherwise, it's not going to be the pattern that I thought it was going to be and that's going to suggest Potentially something different for the dollar. So if the dollar is going to move higher It really needs to start moving higher On the DXY and that's why we're sort of where we are with those other currency pairs, you know We look at the 10-year. We're just kind of hovering right along this trend line Here's the 10-day exponential moving average acting as resistance Again, the 10-year is at a point right now where Tomorrow assuming it doesn't trade down meaningfully you're either going to be trading on it the trend line Or you're going to be trading up above it The momentum here has clearly been would appear to have been You know broken but again, this is all very on the cusp, right? Because we've seen already on a couple of occasions where we got up to the trend line here And we came down we got to the trend line here and we came down and now we got to the trend line here And we're starting to show signs of weakening So if this idea that the 10-year is going to break out that I have and is going to start, you know Retracing back up to from somewhere around 470 is going to work then the 10-year really needs to break out tomorrow And get above this four and a quarter level and start heading towards 430 the RSI suggests the momentum is certainly there for the 10-year to rally It's just whether or not it can clear this resistance level around 425 Look at the 30 year. It's the same picture You looks like you're trying to break momentum if there's going to be a shift higher and a rally in rates And you're going to see rates kind of move back up towards this 480 area on the 30 year You're going to have to break the the the 10-day exponential moving average around 435 Because again, this is just where we are right now this market when you look at it from a Dollar perspective when you look at it from a credit spread perspective and you look at it on rates You can see everything is sitting at this point where it's almost becoming a make-or-break moment You know when you look at the NASDAQ The the interesting thing today for me on the NASDAQ is that and we've talked about this pattern before that I that I use for in terms of one signaling overbought and oversold levels We use this in the Dow back here and we did consolidate for a few days and now eventually we're moving higher So here you can see in the NASDAQ today We crossed above the exponential moving average and we got an RSI of 71 Suggesting that the index appears to be at least at this point in time overbought now Does that mean that? We have to go down tomorrow. No, of course it doesn't mean that but what it means is that we're due for some sort of Consolidation whether that means we consolidate sideways through time or we pull back What this is telling us is that the upside seems more limited we can see that you know It happened here in July where we traded three four days above the exponential moving average Or we traded above the the Bollinger band and we got more and more overbought in each case So it's certainly possible that you could see a repeat of that But in a couple of days times you came back down to this level and then you know if you go back and you actually look at this time period This happened right around the time of monthly op-ex, you know We have monthly op-ex coming up in just a couple of days. So this is something to pay attention to Obviously the Dow we talked about you know getting above this 36,445 level with the next level of resistance being 36,952 But again, you can see the Dow is extremely overbought on the RSI But we haven't hit the upper Bollinger band yet So I would look for that to be a resistance level first around 36,767 And that would be the first level I'd be looking for and from a support level I'd be looking for the 10-day exponential moving average to be the support level from that standpoint and then You know, this is a Rising broadening wedge that we appear to be forming in the S&P Today we got very close to the upper bound of it today We also saw the the market basically get an RSI above 70 on the S&P 500 in fact it got up to 73 we went through the upper Bollinger band and we basically hit right up against the upper bound of the rising wedge The rising broadening wedge and so again like the NASDAQ this is sort of implying that we should see some Consolidation around these levels You know and and if we were to see the the index go up And if we were to see the index go above the upper Bollinger band and break the the megaphone pattern I would be looking for 4663 That's really the last unfilled gap from this entire last two years of Trading craziness that we've seen in the markets So I hope this video helped you and I hope you have a good day and we'll be talking to you again soon. Bye