CPI came in hot, yet both yields and S&P 500 didn‘t maintain their downswings. The odds of Fed rate hikes weren‘t that much changed – speaking about both Sep and Nov, where a Nov hike is the underappreciated possibility, not a base case. The bears couldn‘t maintain the opening session‘s progress, and rotations had been actually quite good most of the session, proving the upswing being more than an intraday trap (as in longer lasting). Some traps take more than 24hrs to resolve.

While the 4,529 / 4,530 indeed marked the daily top, the aftermarket session indicated that the buyers aren‘t done. The upcoming reversal catalysts though may not be enough for fresh selling, and whatever materializes may be bought similarly to yesterday, when all is said and done – yet 4,550s are likely to cap the upside today.

And with more evidence of inflation in the pipeline, Fed would be hard pressed not to act later this year, with bears risk taking consequences.

S&P 500 and Nasdaq Outlook

(Click on image to enlarge)

4,550s are to be respected in all likelihood till the closing bell, and prices – especially if led by tech benefiting yesterday from failure of yields to rise further post PPI, especially if tech takes the same clue and declines today – shouldn‘t approach this level during the regular session. Also for good progress confirmation, the sectoral view should favor utilities more than financials or industrials, with the latter two dipping, going negative later today. The tightening message is simply too strong to ignore.

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