With the markets moving like they have been, there’s a lot to unpack.
We’ve just seen the S&P 500 break above that 50% Fibonacci retracement level we talked about last week.
This is a good sign, but we’ve got the Consumer Price Index (CPI) coming out tomorrow, and that’s gonna be a big deal.
In the meantime, earlier today, the Producer Price Index (PPI) came out showing prices are still creeping up, though not as fast as before.
We’re up 2.1% year-over-year, which tells us inflation is still hanging around. The Fed’s in a tough spot here — they’ve got to keep those interest rates high to fight inflation, but it’s squeezing consumers’ wallets.
Tomorrow’s CPI report is where all eyes will be looking for tomorrow morning.
If we see signs that inflation is cooling down, the market could take it well. But if inflation stays “sticky”, the Fed might keep up their rate hikes — or at least leave them unchanged.
Tomorrow’s pre-open CPI reading will give us a good sense of how all this is impacting what we pay for stuff and how folks are spending their money.
Meanwhile, after pushing through that 50% Fibonacci level, the S&P is eyeing the 61.8% mark at 5492.
If we close above that, it could set us up for a run at all-time highs. But, like I said, everything’s riding on what we see in the CPI tomorrow.
Turning our attention to retail, Home Depot’s (HD) earnings, which came out earlier today, looked pretty solid, thanks in part to some seasonal hurricane activity. The stock dipped and recovered, all before the open, so that was interesting.
Now, keep an eye on Walmart’s (WMT) earnings. They’ll give us a good look at how consumers are behaving.
More folks are turning to value shopping with places like Walmart and Costco, which says a lot about the current economic sentiment.
All in all, I believe we’re sitting at a critical point here.
Tomorrow’s CPI is gonna tell us a lot — it’ll influence everything from the Fed’s next move to the way the market reacts.
Keep your eyes on those key levels and stay ready for whatever the market throws our way.
— Geof Smith
P.S. Heading into an election, this one ticker has historically pulled the same stunt every August. And it looks like it’s about to happen again. Click here to see what I’m talking about.
