Morning Notes – 5/11/2022

Good Morning:

• The top line and core inflation numbers came in at 8.3% and 6.2% for April, slightly higher than Wall Street’s consensus expectations.
• The market tamped down a pre-market rally on the heels of the report.
• So nothing has changed much from yesterday. Support is strong at 4000, and then the overnight low around 3950. Resistance is firm at 4100.
• Of course, if the market spends much time below 4000, it becomes resistance.
• We expect another 100 point range from the open today – meaning 50 points plus or minus the Open.
• The WEM low around 3985 will be a magnet until the close (weekly expiration) tomorrow. But there is little (if any) support below 4000 from the options market and a spike or capitulation is possible if prices start to find acceptance below this important level.
• Look to 3950 as the line in the sand. Otherwise, a short-covering rally remains a distinct possibility as the day gets underway.
• I will have more to say later today, as I have a chance to take a deep dive into the inflation statistics.

A.F. Thornton