Stock prices remained close to their local lows yesterday – will they bounce following today’s CPI release?
The S&P 500 index lost 0.70% on Wednesday as it retraced its Tuesday’s intraday advance after bouncing from the 4,500 level. The market reached new local low of 4,461.33 yesterday. It was 145.7 points or 3.16% below its July 27 medium-term high of 4,607.07.
There is still a lot of uncertainty concerning monetary policy, some technology/AI stocks’ valuation concerns, but investors’ sentiment remains bullish.
Stocks will likely open 0.3% higher today after the Consumer Price Index release. It was as expected at +0.2% m/m. Recently the S&P 500 broke below a two-month-long upward trend line last week as we can see on the daily chart:
Futures Contract Remains Above 4,500
Let’s take a look at the hourly chart of the S&P 500 futures contract. It continues to trade along the 4,500 level. The nearest important support level is at 4,480 and the resistance level remains at 4,540-4,550, among others.
Conclusion
The S&P 500 will likely extend its consolidation following consumer inflation data. It still looks like a correction within an uptrend. However, the market may see some more uncertainty.
Here’s the breakdown:
- The S&P 500 continues to trade along the 4,500 level after bouncing off the recent high of around 4,607.
- In my opinion, the short-term outlook is still bullish.
Thank you.
Paul Rejczak,
Stock Trading Strategist