SPX500_m dips after higher headline CPI

SPX500_m bulls are losing the upward momentum, after almost reaching the 4400 round number.

At the time of writing, markets are still digesting the latest CPI prints:

• Core CPI MoM: 0.3% vs 0.3% forecasted
   
• Headline CPI MoM: 0.4% vs 0.3% forecasted
   
• Headline CPI YoY: 3.7% vs 3.6% forecasted

At the same time, the weekly US initial jobless claims still remain suppressed at 209k, signaling that the US jobs market could still underpin inflationary pressures.

The uptick in inflation, along with the still-robust job market may persuade the Fed to go for another interest rate hike this year, thus providing downward momentum for the SPX500_m bears.

As of now, the markets imply a 12% &  42% chance of one more rate hike in November and December respectively.

However, there is still plenty of time before the upcoming Fed meeting (~ November 1st) and any potential inflation clues (e.g. PCE price index, initial jobless claims etc.) may sway the Fed’s decision in either direction.

This suggests that the underlying S&P 500 index could see heightened volatility during those data releases, as markets still try and predict the Fed’s next moves.

On the technical side …

• Potential support levels are at 4344.10 (21-period SMA) and 4330.20 (50 Fibonacci level)
   
• Next potential resistance level is at 4400 (round number)/4396.6 (38.2 Fibonacci level)
   
• Death cross pattern (50-period SMA moving below 100-period SMA) has formed at around 4413, indicating a potential downtrend trend