With inflation data due this week, we expect to see some volatility in equities. Based on how markets have reacted to the reflation trade thus far, a higher than expected PCE outcome could be negative for stocks though one would also expect firms to rebalance their portfolios and look to buy stocks that perform well in less accommodative monetary policy cycle so we will need to see how the market trades the news. Note the correlation between safe-haven currencies and the volatility in equities as well as the strength and weakness of the USDollar.

Below I have provided the scenario for bulls and bears while also taking March pivot points into consideration.

S&P500 Daily

Price is back at the 61.8% fib of the bearish move. Note that the target for price is MPP after coming up off the profit taking zone for Feb. MPP is currently aligned with March's MM3. The daily stoch is overbought and has crossed though has not yet dropped down into the trade zone. Will this resistance hold and move price lower or are bulls going to get price up to the MPP target?

S&P500 H4 Scenario A

With price opening at WM3 and WM3 marking the top of the range on this time frame and the 61.8% fib on the daily time frame, bears see price heading down to WM1. Note that the H4 stoch is bullish and heading towards overbought and does not indicate bearish price at the time of writing this post. Due to price ranging, a bear would like an overbought stoch at the top of the range with the stoch crossing and moving down into the trade zone as an indication of bearishness.

S&P500 H4 Scenario B

Price is at resistance so bears are expected to sell here. With price ranging S1 is the pivot point we expect to see holding as support. S1 has a target of R1.

S&P500 H4 Scenario C

This scenario is scenario B though with a pullback and then a move up to MPP which is the target from MM1. Note that due to the time of the month it is very possible that MPP is not reached though I have included this scenario anyway.

NK225 Daily

Price failed to break resistance for the whole of last week though also failed to move lower. With price still being at resistance, are bears going to sell and is price going to move down into next month's target or do bears take profit and will price head up higher? It makes sense that if price is moving down on S&P500 it will move lower on NK225 and visa versa due to overall risk on or risk off tone.

NK225 Scenario A

WIth price heading towards WM3 and the H4 stoch heading up to overbought, it is possible that bears sell here with a target of WM1.

NK225 Scenario B

Price is heading towards resistance and we expect bears to sell at resistance though with price moving sideways it is possible that WS1 holds. WS1 has a target of WR1.

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