The CPI numbers came in roughly in-line, which produced some relief buying, but as the market contemplates the bigger issue of inflation, it is losing steam. It is not inconsequential that inflation is at the highest levels in nearly 40 years, and the Fed will have to deal with it sooner or later.
What is helping the market at this point is that there is some talk that pricing pressure is slowing in some areas. This may just be political spin to a great degree, but there are a few bright spots.
Stocks are trading in a very inconsistent fashion. Breadth is slightly negative, and strength in Microsoft (MSFT) and Apple (AAPL) keeps the Nasdaq 100 ETF (QQQ) in positive territory, but the Russell 2000 is red and is looking to fill the gap that was created in its chart on Tuesday morning.
Next week the Fed meets and will have their updated policy statement on Wednesday. The market will be very focused on that report as it is likely to provide some further insight into tapering and potential rate hikes.
I'm focused on managing individual positions. There are still many secondary stocks that have solid fundamentals that are struggling as they try to deal with the two-tiered market action that has been an issue for so long. Good stock picking is not being rewarded right now as a few big-caps are sucking up funds looking for safety.
The number of new 12-month lows has contracted to around 100, which is a sign that stocks are still well off the lows they hit last week. This is retest action so far, but that doesn't mean that it isn't a pain to deal with.
I have a number of names I'll be looking at for additions later in the day. One of my top picks today is Ford (F) which has a very attractive technical pattern.