Today’s price action

Price continued to fluctuate around the 533 level from last night’s briefing, barely closing above it at the end of the day. The market’s reaction to the Producer Price Index (PPI) tomorrow at 8:30 am EST and the Consumer Price Index (CPI) on Wednesday at the same time should clarify whether we continue recovering or move toward retesting recent lows.

PPI and CPI

The VIX saw more trending price action today than SPY, but it was not strong enough for me to gauge direction from here. If the PPI and CPI are positive for markets, it’s possible to see the VIX fall back into the wedge rapidly. From there, the market should resume its uptrend. Conversely, if the market responds negatively and the VIX starts spiking again, a major sell-off could occur sooner than many expect. I favor the first scenario, but it’s important to be aware of both sides.

SPY: Support and resistance levels

I am still looking for an opportunity to reenter short, so my ideal scenario would be a bullish response to the PPI and CPI over the next two days and a retest of the 539 or 555 resistance levels. On the flip side, SPY has short-term support around 529 and 522.