A trade through 24889.37 will signal a resumption of the uptrend. There are no upside targets but we will be monitoring for any signs of selling pressure like a daily closing price reversal top.
The index broke a short-term pivot at 24544.19 earlier in the session, but the follow-through move was weak with the market stopping at 24491.83 before rebounding to 24762.20. The next break through 24544.19 and 24491.83 will signal the selling pressure is getting stronger with a Gann angle at 24317.00 the next target.
We could see another technical bounce on the test of the Gann angle, but taking it out with strong selling could trigger an acceleration into the minor bottom at 24199.00. Taking out this level will shift momentum to the downside and likely lead to a test of the short-term retracement zone at 23842.60 to 23595.56.
Watch 24836.60 into the close today and Friday. A close under this price could open the door to some heavy selling pressure next week. Until then, the trend is your friend.
GDP and Inflation Telling Two Different Stories
First quarter GDP came in stronger than expected, supported by government spending. I stripped out that component immediately because government spending is not the same as organic economic growth and it does not sustain a rally on its own. The concern is what higher gasoline prices do to the consumer in the second quarter. That is where the GDP story gets complicated and traders are starting to think about it.
The Personal Consumption Expenditures report confirmed what the Fed already knew. Core inflation is still running above target. The Fed holds and the language stays firm. Rate cuts are not getting closer and nothing in Thursday’s data changed that calculus.
