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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 a 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, and 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:

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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.

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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.

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