Yesterday, the US CPI report
came basically in line with expectations as the market was already expecting
higher energy prices to push up the August inflation readings. The Core
measure, which is what the Fed is focused on, was in line with forecasts with
the monthly figure just a touch higher than expected. The core 3-month
annualised rate is now 2.4%, which is a good indicator for the Fed that their
policy is working well. Now, the question is whether the labour market softens
enough to bring inflation sustainably back to target without a recession. And
this is something that never happened in history.
S&P 500 Technical
Analysis – Daily Timeframe
S&P 500 Daily
On the daily chart, we can see that the S&P 500
is still consolidating on the key support around
the 4455 level where we have also the confluence with the
red 21 moving average. This is
where the buyers are likely piling in with a defined risk below the level to
target a rally into the 4540 resistance.
S&P 500 Technical
Analysis – 4 hour Timeframe
S&P 500 4 hour
On the 4 hour chart, we can see that we’ve been
stuck in a tight range for a week now as the market is probably awaiting some
strong fundamental catalyst to push it in either direction. A break below the
support will invalidate the bullish setup and likely lead to more selling
pressure, ultimately taking the price to the 4328 support.
S&P 500 Technical
Analysis – 1 hour Timeframe
S&P 500 1 hour
On the 1 hour chart, we can see more
closely the tight range between the 4455 support and the 4490 resistance. More
conservative buyers may want to wait for the price to break above the
resistance before piling in and ride the rally into the next resistance at
4540.
Upcoming Events
Today is likely to be a volatile one given that we
are going to see lots of top tier economic indicators released at the same
time. In order of importance, we will get the US Jobless Claims, Retail Sales
and PPI data. The September FOMC meeting is already a done deal as the market
is pricing a 97% probability of a pause, so the data is going to influence the
November and December expectations. Tomorrow, we conclude the week with the
University of Michigan Consumer Sentiment report.