Market Still Indecisive With Economic Data Looming

Another day, another slow and choppy price action in the stock market.

Coming into the cash session, the S&P 500 futures were trading down about 10 points or -.28% with a bearish and indecisive sentiment. The Nasdaq was also trading down by roughly 90 points or -.68%. The strength was a little more apparent than the S&P 500 at the time of the opening bell. 

The exhaustion from the session Monday appeared to carry over into Tuesday and into the U.S. Consumer Price Index (CPI) numbers to be released before the cash session on Wednesday. This exhaustion has led to the bulls being halted, at least for now.

With the lack of buying pressure from the bulls and no real selling from the bears, the market slowly trickled down and sideways in a controlled manner all day. 

According to Simpler Trading, “It is important to note that this is a pullback in the market with CPI coming this week rather than a sell-off. This will be until the daily 21 exponential moving average (EMA) is broken, and then it can be classified as a sell-off.”

Ultimately, there is no clear direction being set by the big money players on Wall Street as there is likely a catalyst looming in the CPI data on Wednesday. The forecast for the release is 8.7% for July, a decrease from the previous month report of 9.1%.

Overall the market is concerned about inflation and interest rates and is looking for an indication of a peak in inflation levels. The consensus is that if the inflation rate is peaking then the Federal Reserve (FED) can cool off the aggressive raising of interest rates.

As Sam Shames, Vice President of Options at Simpler Trading has previously mentioned in his live-trading session, it is important to understand that the data release is expected to be bad.

Sam noted that it is not a direct correlation between bad data and bad market reaction. The market will react based on the expectation versus actual numbers.

This is why the market is indecisive and non-directional as we await the release of numbers to see if they are better or worse than expected. 

At the close of the cash session, both the S&P 500 and the Nasdaq closed down pushing session losses slightly further down to -.48% and -1.2%, respectively.