I lied when I said I would update the real retail sales chart over the weekend! I forgot I needed the CPI numbers. While an estimate of the CPI can be made, there is no rush, so I will wait until Thursday.
The market seems ready to head even higher with the put/call ratio oversold:
I think today's probable gap down is a buy, especially with the Fed meeting tomorrow.
I talked on Wednesday about what I called the Fed effect. These days this effect means a weak dollar and a rising stock market. I was two days early, but the effect is there:
USD futures, 60 minutes chart.
As long as the Fed does not change its language towards inflation, the dollar will weaken further. I think there is a too small probability for this change to happen at this meeting. The inflection point in this trend, and probably in the dollar's downtrend, will be after the ECB meeting in April. April is also close enough to the end of the QE2 program and traders may try to be ahead of the curve and buy the dollar earlier. Meanwhile, the stock market may even make marginal new highs.
P.S.: I will not be at my desk tomorrow and Wednesday, so the earliest I will post again is Thursday.
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