Final Leg of Rally Underway With CPI on Deck

The final leg of the rally got going overnight. Russell 2000 has about 2.4 percent to go, Nasdaq 3.5 perecnt to a corrollary resistance area.

The December CPI report is out tomorrow. Crude oil was flat on the month. Inflation expectations should be forward looking, but most of the market is driving in the rearview mirror. The only part of this report that will matter is the sticky-CPI, subcategories such as rent. If those come in high, then the 20 percent advance in crude this year becomes a catalyst for a much higher CPI in January and February. Otherwise, CPI is aleady priced in.

Coffee broke out. An individual commodity can trade for its own reasons, but I can't ignore the significance if coffee breaks out of a 50-year trading range. If inflation is taking off, individual commodities should break out of their trading ranges.

The 30yr futures (ZB) bounced above major support. That's helping the stock market today, but this could flip on a dime and back again until the next major move reveals itself.