Softer Core PCE and Lower Yields Keep S&P 500 Index Bulls In Control

Spending Holds Up

Personal spending rose 0.5% matching expectations but it’s still down from the reading before of 1%. All in all consumers are still spending. The figure supports the earnings backdrop while also calming inflation anxiety.

Personal Spending Remains Steady

Durable Goods Jump

Durable goods orders jumped 7.9% well above the 3.5% forecast, but I wouldn’t call it a clean cyclical boom signal. The headline was boosted heavily by aircraft orders, while core capital goods were weaker.

Durable Goods Orders Surge On Headline Strength

Core PCE Cools

Core PCE came in at 0.2% MoM, below the 0.3% forecast. This MoM print gives the market some relief because it reduces the pressure for yields to keep pushing higher. The soft landing story is still alive and well.

Core PCE Comes In Softer Than Expected

Yields Are Rolling Over

Yields are currently below the 50-SMA when we look at the Renko chart. The short to medium term trend has shifted. These declines are providing an opportunity for equities and are giving them more room to breathe. Nonetheless the US 10 Year yield is still above the long term 500-SMA. Additionally, the Z-Score SMA is oversold and looking to turn higher, a signal that current declines would be decelerating. We need more of these declines to denote a change in trend in yields.

US 10 Year Yield Pulls Back From Recent Highs

S&P 500 Renko Breakout Holds

The 20-brick Renko still looks bullish. Price is sitting around 7,560, above the 50-SMA near 7,410 and well above the 500-SMA near 6,840. That’s a strong structure. The RSI is near 64.8, so momentum is positive, while the Z-Score near 1.9 tells me the move is a little stretched but not broken. We may get a pause toward 7,460–7,410, but as long as buyers defend that zone, I’d keep the S&P 500 Index pointed toward 8,150 over the medium term.

S&P 500 Index Is In A Clear Uptrend

The Verdict

Current Trend Direction: Bullish

Bias: Positive

Support Levels: 7,240, 6,780, 6,310

Resistance Levels: 7,450, 8,150

Medium Term Path: I expect the S&P 500 Index to keep grinding higher toward 8,150, provided price holds above 7,240 and the 10-year yield doesn’t snap back above 4.58%. The Renko structure is bullish, Core PCE cooled just enough, and personal spending still supports the earnings story. We may see some hesitation near current highs because momentum is stretched, but I’d still treat pullbacks as buying opportunities while the Index remains above the Renko 50-SMA.