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Market’s gains add more risk to CPI report, market observers say

The stock market continues to drift higher this week into Thursday’s key inflation reading, and that could make a negative surprise on inflation more painful for investors.
BTIG technical strategist Jonathan Krinsky said in a note to clients on Wednesday afternoon that the market may already be pricing in a positive report tomorrow, which could create some large selling if inflation is hotter than expected.
“As with any ‘binary’ event, it’s often the case that the price action prior to the event has an impact on the price action following the event,” Krinsky said. “In other words, some of the recent 3.6% rally over the last few days has likely dampened any upside surprise and created more potential for disappointment on the downside. Of course that doesn’t mean we will go down tomorrow, but just the opportunity for a bigger downside move would appear greater than an upside move, in our view.”
But if investors are preparing for an optimistic report tomorrow, they aren’t doing so with much conviction. Krinsky also pointed out that the volume on the Invesco QQQ Trust on Tuesday was at its lightest level since Thanksgiving.
Still, Jason Ray, founder of Zenith Wealth Partners, said investors have “never ending optimism” that the markets will perform better once the Fed gets the data it needs to change course on interest rate hikes.
And Daniel Eye, chief investment officer of Fort Pitt Capital Group, said to expect “fireworks” within markets following Thursday’s CPI report regardless of the actual reading given how much investors have positioned themselves ahead of its release. $Nasdaq Composite Index(.IXIC.US)$ $Dow Jones Industrial Average(.DJI.US)$ $S&P 500 Index(.SPX.US)$ $SPDR S&P 500 ETF(SPY.US)$ $Invesco QQQ Trust(QQQ.US)$
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    True and timely
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