On the daily chart below for S&P 500, we can see that after bouncing from the key 4061 support again, the price rallied into the next key resistance at 4175 and stalled. This level has been holding buyers at bay since September 2022. Boring… Anyway, the market is still uncertain if we get a soft landing or a hard landing. On one hand, the labour market remains resilient as shown by the strong NFP report last Friday.

On the other hand, the disinflationary trend seems to be slowing as shown by the CPI report yesterday, and the Fed might be forced to do more to bring inflation back to the 2% target. At the moment, this is not what the market expects but it also doesn’t have any strong conviction to justify a breakout.

S&P 500 Technical analysis

In the 4 hour chart below, we can see that we got stuck in a range between the 4061 support and the 4175 resistance. The CPI data yesterday was in line with expectations with a little improvement on the Y/Y figure and the core services ex housing number, which is what Fed Chair Powell is looking at. Overall, it justifies the market’s expectation for a pause in June, but it’s hard to see rate cuts without a deterioration in the labour market data.

In the 1 hour chart below, we can see the messy price action after the CPI report. First up into the resistance, then down into the support and then up again. Real chop. There’s nothing to do here other than waiting for a clear breakout on either side and then go with the flow. The next key risk events are the US Jobless Claims today and the University of Michigan Consumer Sentiment survey tomorrow.