SPX500_m trading close to 4800 despite higher CPI

After an initial drop, amid the higher-than-expected US CPI reading on Thursday, the SPX500_m bulls are trying hard to keep the initiative and stay close to the psychologically important 4800.

Newly posted inflation readings are:

• Core CPI MoM: 0.3% vs 0.3% expected
   
• Core CPI YoY: 3.9% vs 3.8% expected
   
• CPI MoM: 0.3% vs 0.2% expected
   
• CPI YoY: 3.4% vs 3.2% expected
   

Despite an increase in inflation, the core CPI MoM (excludes food and energy prices) has remained below the previous month’s reading and even showed a YoY decrease (3.9% vs 4.0% in Dec).

An increase comes largely from rising shelter costs, which according to Fed, are expected to lower through this year.

The S&P500 bulls are now trying to keep the markets close to the 4800 psychological level with a 21-period SMA set to provide critical support in case the SPX500_m bears try to regain the initiative.

In spite of inflationary risks, the markets are still implying a 61.9% chance of a rate cut in March 2024.

On the technical side…

• SPX500_m current position, trading above the key moving averages (21,50 &100-period) may suggest a potential for a continuation of a bullish trend
   
• The proximity to the 4800 psychological threshold and the all-time high (>4820) further reinforces this upward bias
   
• To the downside the 21-period SMA at 4742.56 may offer initial support followed by the 4700 level in a more negative scenario
   
• Conquering the 4800 resistance level may propel the SPX500_m bulls further towards the all time high