A.M. Update

Good morning.

Thus far I don't see anything that would change expectations from yesterday's Daily Wrap. The market is deeply oversold, there are 3 conditions relating to breadth that have been reliable markers as to next-day activity suggesting a bounce on an oversold basis and there are the 3C indications suggesting early weakness today.

As for the F_E_D and the morning after, I can't help but get a strong feeling that the switch from quantitative guidance to qualitative guidance or what you may have hears described as "Data dependency" is really as we saw it when Bernanke made the changes late in his term. This allows the
F_E_D to look past whatever may be going on and chose what their reality is, honestly, an economic upgrade since the last meeting is pretty far from warranted, but it's certainly not something I think they believe, it's something that is part of the process of normalizing rates so you don't have a surprise action like the Swiss National Bank's blunder that created chaos and put multiple brokers out of business overnight.

All in all, this was hawkish and in my view the next logical step between the last meeting and a rate hike. I don't profess to understand how a rate hike can be justified while inflation and economic numbers are coming in like they are, but as we have suspected for some time, I don't think policy normalization has anything to do with the state of the economy beyond being able to say, "We think it's strong enough to start normalizing policy". What's really scary is to think about what is driving the F_E_D toward normalization when the data part of data dependency is pretty far from the F_E_D's upgrades yesterday.

As for the rest of the week, I still expect to see further weakness develop in the charts as it seems we are right on track for ending this cycle sometime this week, although most of it has been in the red as opposed to moving up where it should be in the cycle at this time, again evidence of what we saw earlier in the month, "Aggressive selling".

I'll be interested to see if there are any changes in the 30 year bond after yesterday's squeeze, this is where some concern was emanating from with recent charts.