Stocks Explode Higher On Lower CPI

The CPI suggested today that inflation is slowing. The market took that as a sign the Fed will slow the pace of interest rate increases. With that prices soared. The rally was widely supported by breadth and volume was higher than it has been for several days. The Indices closed at the high of the day, suggesting they will likely move higher at the open tomorrow. However, watch for a breadth divergence that could signal a pause or rotation lower. The market is extremely overbought after today’s move, but it does not preclude them from continuing higher. Being overbought is simply a warning flag.

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