How CPI Can Make Or Break S&P500 Next Week!

Investors will get key economic updates on Tuesday, 14 March 2023 when the U.S. Labor Department releases its February Consumer Price Index reading at 8:30am. If the numbers appear hotter than expected, the stock market will go belly up as the Fed will determine the next rate hike based on the data. The save the Fed from raising higher interest rate, the CPI for February needs to be lower than 6.4%!

CPI at 6.4% in Jan 2023

The annual inflation rate in the US slowed only slightly to 6.4% in January of 2023 from 6.5% in December, less than market forecasts of 6.2%. Still, it is the lowest reading since October of 2021.

SPY flipped support into resistance on Friday

On Thursday, the SPY printed a bearish Marubozu candlestick, which indicated lower prices were likely to come on Friday. When the market opened, the ETF attempted to regain the 200-day SMA as support but failed before a further sell-off began.

If the SPY closes the trading day near its low-of-day price, the ETF will print a second bearish Marubozu candlestick, which could indicate lower prices will come again on Monday.

Eventually the SPY will bounce up to at least print another lower high and that is likely to happen early next week because the ETF’s relative strength index is entering near-oversold territory. When the SPY bounces, it’s likely to reject at the descending trendline, at least temporarily.

The SPY has resistance above at $385.85 and $394.17 and support below at $381.30 and $371.48.

A model forecasted Feb CPI to fall 🤞

Like to share one CPI model above which has been backtested to be within 0.126% of Fed CPI for 7 months (vs. avg analysts error of 0.171%). Data from @truflation and based on @noimwill's method with additional data point to improve error rate by 0.05% resulting the forecast for Feb CPI at about 5.67%.

⚠️ Let's have some fun to make a guess. What do you think the CPI in Feb will be? Will it sink the market or keep it afloat until FOMC on 22 March? Pollends on Tuesday at 6am (before CPI data releases) 🗳

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