S&P 500 Rises Following Inflation Data Release

Historically, September has been the worst month for the S&P 500 (US SPX 500 mini on FXOpen), and the start of the month reflected this trend, with the index dropping around 4.5% from 1 to 6 September, indicating bearish sentiment.

However, yesterday's event — the release of the Consumer Price Index (CPI) — may have marked a turning point.

According to Reuters, US inflation data showed that the core CPI rose by 0.28% in August, slightly above the forecast of 0.2%. This led market participants to believe that the Federal Reserve might agree to a 25-basis point rate cut next Wednesday.

Technical analysis of the S&P 500 (US SPX 500 mini on FXOpen) chart indicates:

→ The price is moving within an ascending channel (shown in blue), having rebounded from its lower boundary yesterday and breaking the local descending trend line (shown in red).

→ The movement from B to C is approximately 50% of the A to B impulse, a bullish signal that suggests the "normal" correction may be complete, indicating a potential rally from the 5 August low.

→ Yesterday's price drop was a false move (indicated by the arrow), creating a bear trap.

As of mid-month, the outlook appears positive. It’s possible that the S&P 500 (US SPX 500 mini on FXOpen) could finish the month in the green, though the Fed's long-anticipated rate cut decision, expected next week, will play a crucial role in this outcome.