V is for Valentines Volatility

The S&P 500 futures rose steadily leading up to the release of the U.S. Consumer Price Index (CPI) report at 8:30 a.m. Eastern, demonstrating a lack of fear in the market. The Core CPI (year-over-year) was expected to have a median forecast of 6.2%, which would be used as a benchmark to evaluate the market’s response to the data. There was high anticipation for the data as the calculation method has recently changed. The new method calculates CPI based only on 2021 consumption rather than the previous two years of consumption.

After weeks of market rally, traders were closely watching the U.S. Consumer Price Index (CPI) report at 8:30 a.m. Eastern. The Core CPI (year-over-year) was expected to have a median forecast of 6.2%, with a new calculation method in place that considered only 2021 consumption instead of the previous two years.

The numbers released indicated a hotter-than-expected report at 6.4%, resulting in a mixed reaction from the market. Initially, there was a move higher, but it was short-lived as a sharp decline followed, setting the tone for the rest of the day. While pre-market activity wasn’t disastrous, the market remained cautious.

Market Fights Back After Sharp Move Lower

Upon market opening, a pop in the market followed the earlier pre-market move downward across the indexes. However, this short-lived cover was followed by a fresh wave of selling volume, which pushed the market lower. As the volume of selling continued to rise, the S&P 500 futures were pushed toward the 4,100 level. Despite this pressure, the 4,100 level, which has proved to be an important support level in the past, held strong and prevented the market from falling further.

4,100 Level Continues to Hold Firm

The market experienced another burst of volatility, causing it to soar once again after holding the crucial psychological level of 4,100. However, this triggered an explosive range of trading between 4,100 and 4,160 for the rest of the session. With each boundary test, the market would swing back toward the other, making for a turbulent trading day.

Levels and Ranges in the S&P 500 Futures

As the week progresses, the narrow range that has been established may reveal which side has the upper hand in the market. A break above 4,160 and 4,180 could drive the market to new heights, while a break below 4,100 could spark a bearish sentiment and send the market tumbling toward 4,000.

Some other levels to be aware of are the 50-day simple moving average (SMA) and 21-day exponential moving average (EMA). The 15-day SMA is at 4,110, helping support the 4,100 level. Below 4,100 is the 21-day EMA at 4,080, which could provide an excellent first target if 4,100 does finally break. 

Economic Data Before Open Tomorrow 

Tomorrow at 8:30 a.m. Eastern, Retail Sales will release their data. The market will be looking for retail sales to continue to rise to indicate consumers are gaining confidence in the market sentiment. If retail sales decline and retail spending are down, it is considered bad for the economy as less money is in circulation. 

Market All Over the Place After CPI

The Nasdaq closed negative on the session as the S&P 500 was positive at the closing bell. The S&P 500 futures closed down 0.05%, declining 2 points, while the Nasdaq futures closed up 0.60%, gaining 71 points. The Dow Jones futures followed, closing down 0.47% and falling 160 points.