Inflation Data Misses Expectations, Stocks Rise

The inflation data coming in below expectations has strengthened rate cut expectations, positively impacting equities. On the SPX, the RSI stands at 57.7, in neutral territory, while the MACD is above its signal line and trending positive. The price is trading above the 20- and 50-day moving averages, supporting a short-term bullish trend. However, following a 2.4% gain in the last 24 hours, the market has not yet entered overbought territory, suggesting a high probability of continued upward movement. Nonetheless, it should be considered that the market may have fully priced in the reaction to the news.

The inflation data coming in below expectations strengthened rate cut expectations, positively impacting equities. The NDX closed above its 20- and 50-day moving averages, finding technical support. While the RSI is neutral at 50, the MACD below its signal line indicates short-term weakness. However, the news flow and positive market reaction could support an upward move for the index in the near term.

Despite the DXY's RSI14 approaching the oversold region at 30.57, the MACD line remains below the signal line, and the index is trading below both the SMA20 and SMA50, presenting a technically weak outlook. The headline inflation data coming in below expectations could strengthen expectations of a Fed rate cut, negatively impacting the dollar. In the short term, the likelihood of a continued downtrend is high, though some buying on dips may occur due to the oversold region. Therefore, while the direction is bearish, the confidence level is assessed as medium-high.