This morning we got the June CPI report which was the last big inflation data before the next Fed rate decision on July 29th. It was considered by many to be the determining factor for whether or not the Fed hikes rates or not. Month-over-month CPI came in at -0.4% which was much better than the expected -0.2% while the annual rate was at 3.5% vs the expectation of 3.8%. This sent futures higher and brought the 10 year treasury yield down. Yesterday the odds for a July rate hike was almost 50%. The cool CPI print brought those odds down and now the market expects the Fed to keep rates unchanged with about a 83% probability.
Semiconductor stocks also recovered today which helped the rebound in tech. The Nasdaq led with a gain of 0.90% while the S&P and Russell 2000 both added about 0.40%. The VIX also pulled back again, closing down nearly 4% at $16.50.
For tomorrow everything remains the same technically as the indexes continued to trade within their primary ranges. For the Nasdaq, its primary uptrend (white) will be the only resistance to watch at 26,600-26,625 on a continuation of the rally. On a pullback, this same range will be support right around 24,900. However, that level is about 4.5% away so even if there is a pullback it will likely just continue to trade in this primary range rather than actually get down there tomorrow.
For the S&P, its primary uptrend (white) will be the only resistance to watch at 7,650-7,655. On a pullback, the 7,335-7,340 area will be the only support to watch from both its primary uptrend (bottom of the range) and its prior downtrend (yellow) where the two trends intersect. However, similarly to the Nasdaq, this support is almost 3% away so even if there is a pullback it may not reach this level and it will just continue to chop around in its primary range for now.
The Russell made an attempt at its primary downtrend today but failed to break through it. And despite the cool CPI print, the rate sensitive index couldn't outperform and at least in the near term it looks the weakest as it remains in downtrends on a daily time frame.
Its first resistance for tomorrow will be from its primary downtrend (white) at about 2,980. If it breaks through that, it will have more resistance from its prior downtrend (purple) at 2,985-2,986.
The first support level to watch will be from its weekly uptrend (see the weekly update) around 2,945 which it almost got to during yesterday's pullback. It would have more weekly support at 2,940 if it doesn't hold this time. After that, daily supports come into play at 2,929-2,930 (yellow) then 2,916-2,917 (purple). Its last weekly support would also be right around there at 2,915 which is its primary weekly uptrend. If none of those hold, the last support to watch would be from its primary daily downtrend (white) around 2,895.
