Highest CPI Since 2023: Bearish Technical Signs Still Looming

Hello everybody. Welcome to Trading the Close. My name is Drew Dosek and today guys the return to selling actually entered the markets pushing some of the major indices down near the lows of yesterday. That rip roaring rally is going to be tested in the coming days. Now today we had CPI data hit the markets this morning. That CPI data certainly was hot. Uh but the core CPI was actually a little bit less. It was at 02% increase even though that is still increasing. It was a little bit less. uh that did highlight the fact now core CPI for those that don't know does not have energy or food included in those calculations. And so what that's doing is it's highlighting the fact that the energy was really a lot of the cause of the increase. That was obvious with oil going up as much as we've seen most recently. But that little bit of a breather if you would say with a slightly less core CPI allowed the markets to at least push up higher from their lower start today. But guys, as I said, the selling pressure resumed. So, let's get into the charts. Let's break down what's going on in the markets. All right. So, you can see here the S&P 500 today down 1.58% closing on or just slightly beneath the top barrier of this parallel channel. That is a big development, guys, because we could be talking about trading back within this parallel channel after this incredible run. Now yesterday I was talking about how this in essence was simply a breakout and retest to the top of the parallel with a great push back up into this consolidation range. But today changes that script alto together because we are testing these highs. Now guys again with the CPI number it was the hottest since 2023. So let's go back on the chart in 2023 and see what happened during that time frame when inflation was a concern and when the yields were a concern. You can see it actually happened right here in July of 2023 and we did have a draw down in the markets by about 11% and then we started rocketing higher. But when we hit the low right here was when the yields a 10-year yield hit 5%.