Stocks rallied on Monday, bouncing back from losses recorded through much of last week. And as we expected, SPX moved up from 4060ish to 4100ish which is right across 8 EMAs.
Chart: SPX daily
Today, investors will try to get more clarity on market direction following the release of key inflation data on Valentine's Day. While January consumer prices are forecast to climb 0.5% M/M for the first time in three months, the annual rate is expected to fall again to 6.2% Y/Y, continuing a decline that started in mid-2022. Keep an eye on the "core" rate as well, which strips out volatile energy and food prices, and is closely watched by Fed policymakers for its inputs on housing and other key parts of the economy.
Marketplace author Mott Capital Management, state that the January CPI report could be a massive shock to the market. Others believe that the market is not living in fantasy land following the big rally in January, like contributor Eric Parnell, CFA. He says that while the Fed is likely to raise rates, and keep them higher for longer than expected, this is in fact positive for the long-term and investors are best served to remain fully allocated to equities. In recent weeks, Fed Chair Jerome Powell has stressed that there is still a long road ahead on dealing with inflation, rather than an instant on/off switch that would result in easier investing decisions.
In my opinion, I don't expect the CPI report will be as positive as the market expected but I also don't expect the FED will take more hawkish action to go against the market.
Chart: SPX 15 mins
From the tech side of analysis, yesterday's trade is more like a rebound in a sharply downtrend, 4140ish trendline resistance is still there. And Fear&Greed Index published by CNN already indicates the market is kinda over optimistic about the report and this is not a positive sign of the market. Therefore, I am expecting the market will drop following the 15 mins trendline and retest 4060ish support level. However, the CPI report release will absolutely increase the intraday volatility.
Therefore, be cautious, and be patient.
Please feel free to express your ideas and thoughts in the comment section.
Today, investors will try to get more clarity on market direction following the release of key inflation data on Valentine's Day. While January consumer prices are forecast to climb 0.5% M/M for the first time in three months, the annual rate is expected to fall again to 6.2% Y/Y, continuing a decline that started in mid-2022. Keep an eye on the "core" rate as well, which strips out volatile energy and food prices, and is closely watched by Fed policymakers for its inputs on housing and other key parts of the economy.
Marketplace author Mott Capital Management, state that the January CPI report could be a massive shock to the market. Others believe that the market is not living in fantasy land following the big rally in January, like contributor Eric Parnell, CFA. He says that while the Fed is likely to raise rates, and keep them higher for longer than expected, this is in fact positive for the long-term and investors are best served to remain fully allocated to equities. In recent weeks, Fed Chair Jerome Powell has stressed that there is still a long road ahead on dealing with inflation, rather than an instant on/off switch that would result in easier investing decisions.
In my opinion, I don't expect the CPI report will be as positive as the market expected but I also don't expect the FED will take more hawkish action to go against the market.
From the tech side of analysis, yesterday's trade is more like a rebound in a sharply downtrend, 4140ish trendline resistance is still there. And Fear&Greed Index published by CNN already indicates the market is kinda over optimistic about the report and this is not a positive sign of the market. Therefore, I am expecting the market will drop following the 15 mins trendline and retest 4060ish support level. However, the CPI report release will absolutely increase the intraday volatility.
Therefore, be cautious, and be patient.
Please feel free to express your ideas and thoughts in the comment section.
