Key Takeaway
The May Consumer Price Index (CPI) report was released at 8:30am EST and it showed that inflation remains red hot and persistent. While expectations were for a rise of 0.7%, the number jumped up 1.0%. When food and energy prices are stripped out, the Core CPI increased 0.6%, just above the 0.5% rise expected. These numbers essentially tell us that the Fed will remain quite hawkish with a 50-basis point hike coming later this month, and a greater chance of similar continued increases for the unforeseen future.
The S&P 500 has continued to struggle below the major resistance line around the 4175 range (pointed out in last week's market update). So now we want to see the S&P 500 hold the bottom red arrow line, or we can expect another leg down. Our cash levels remain high and our radar is on high alert. If near-term support level fails, we'll take further action to help protect.
Market Pros:
- Approaching "double-bottom" support...the next several trading days will tell if it can stick the landing or if it will continue its descent below.
- Not much else...
Market Cons:
- Down-trend remains in full-effect - lower highs, lower lows.
- If the S&P 500 cannot hold the "double-bottom" and indeed experiences a lower leg down, there is not much support below, and it's quite plausible that it will drop to it's Weekly 200-Day moving average putting the S&P500 in the 3500 range, equating to another ~10% down....time will tell.
S&P 500 Daily Trend Chart
