SPX staged an aggressive rally of +6.16% after better-than expected CPI data, rebounding off its 10/20-day moving average, The huge gains were a manifestation of pent-up hope that inflation has peaked and that the ultra-aggressive nature of the Fed's policy approach has also peaked. Briefly, total CPI increased 0.4% month-over-month in October while core-CPI, which excludes food and energy, increased 0.3% month-over-month. The monthly changes left total CPI up 7.7% year-over-year, versus 8.2% in September, and core CPI up 6.3% year-over-year, versus 6.6% in September.The key takeaway from the report wasn't singular. It was manifold: (1) The report helped validate the peak inflation view. (2) The report is apt to compel the Fed to take a less aggressive rate-hike approach at the December FOMC meeting. (3) Some encouragement was borne out of the understanding that the shelter index (computed with a lag) contributed more than half of the monthly all items increase, suggesting price increases moderated in many other areas.
SPX currently trades inside a month long uptrend channel, below its medium term downtrend line. The resistance to reclaim for further positivity in the market is at 4,080, the current declining 200-day moving average level.Bull Case: Reclaim above 4,080, the current declining 200-day moving average level.
Bear Case: Breakdown of 3,800 level, breaching its rising 10 & 20-day moving average. Next support at 3,700 level.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.