Four charts this morning. One data point that changes the context for all of them.
US inflation came in at 3.8% for the 12 months ending April, up from 3.3% in March, marking the highest reading since May 2023. That's not a blip. That's a trend. January was 2.4%. February was 2.4%. March jumped to 3.3%. April came in at 3.8%. Four consecutive months of acceleration. usinflationcalculator
And tomorrow, June 10, the May CPI number drops. Given the trajectory, the probability of another upside surprise is not small.
This changes everything for how you read the other four charts. Let me walk through it.
Why re-accelerating inflation matters more than most people think
The entire bull case for equities in 2026 has rested on one assumption. That the Fed would cut rates as inflation came under control and the economy softened. That assumption is now under serious pressure.
At 3.8% and rising, inflation is not under control. It is re-accelerating. The Fed's 2% target feels further away now than it did at the start of the year. And with the 10-year Treasury yield sitting at 4.55% and trending higher, the bond market is not pricing in cuts. It is pricing in the possibility that rates stay elevated or go higher.
That combination, sticky inflation plus elevated yields, is one of the most hostile environments possible for growth assets and risk. Equities at all-time highs in that environment are not pricing in what the macro data is saying. That's the gap I've been watching all year.
SPX - 7,409. Bearish engulfing at the highs. Yield backdrop is unfriendly.
SPX is sitting at 7,409 after printing a bearish engulfing candle at 7,544. That candle marked the high. The move from the lows earlier this year to 7,544 was a 20-plus percent rally driven by sentiment and liquidity. The reversal candle that followed was the first technical warning.
Now add in the inflation picture. 3.8% inflation with a 4.55% 10-year yield means real rates are barely positive. Equities at these valuations with barely positive real rates are priced for perfection. Any further inflation acceleration forces the Fed's hand and removes the rate cut narrative that has kept this rally alive.
The first support I'm watching on SPX is 7,043.5. A daily close below that level changes the short-term bias decisively. Below that, 6,525.5 and then 6,354 are the next meaningful supports. And the green zone I've been watching as the macro accumulation area sits between 6k and 6.2k.
For those asking when I would adjust my cash position, that's where the detail sits. It's in today's premium issue.
I remain 100% cash. Midterm years are historically bearish. The inflation data released this week only reinforces that thesis.
Gold - 4,327. Inflation rising but gold falling. Understanding the disconnect.
This is the question people keep asking. If inflation is at 3.8% and rising, why is gold at 4,327 and in a downtrend?
The answer is the 10-year yield. When nominal yields rise faster than inflation expectations, real yields increase. Higher real yields make gold less attractive as a non-yielding asset. That's the dynamic suppressing gold right now despite the inflation backdrop.
Gold peaked at 5,611. The descending trendline from that high has been the ceiling ever since. Current price at 4,327 is sitting below that trendline with the next meaningful support at 4,105.55. A daily close below 4.1k would open up a more significant leg lower.
The scenario that changes the gold picture is if the Fed is forced to let inflation run higher while keeping rates flat or cutting anyway, which would push real yields negative. That's the setup where gold recovers and eventually makes new highs. But we are not there yet. Currently the trendline is in control and the bias is lower until price closes above it convincingly.
Oil - 91.35. Feeding the inflation narrative.
Oil at 91.35 between 87.63 support and 94.59 resistance is not just a chart level. It's a macro input.
Oil above 90 feeds directly into CPI through energy and transport costs. March inflation accelerated partly due to an energy spike. April followed with another 0.5 percentage point jump. If oil breaks above 94.59 and sustains, the May CPI print tomorrow could come in even hotter.
On the downside, 87.63 breaking would give the Fed some relief on the inflation front. It would also signal softening demand, which is a growth concern. Oil's direction in the next few sessions is not just a commodity trade. It is a macro read.
The position. Unchanged.
100% cash. Not adjusting until SPX shows the kind of correction that sets up the macro low.
The inflation re-acceleration is exactly the kind of background condition that makes mid-term year equity corrections not just possible but historically consistent. When the Fed is constrained by inflation and equities are at all-time highs, the resolution has historically been a correction that reprices risk at lower levels.
That repricing is what I'm waiting for. The specific SPX levels that would trigger a position adjustment and exactly what that adjustment would look like are in today's premium issue.
Tomorrow's CPI print is a risk event. Keep that in mind.
Full breakdown and position framework at www.whop.com/digitalvault1
Victor
