The rebound in equities reversed course on Thursday following some hotter than expected inflation data. The CPI reading for January shows prices advanced 0.6% for the month on a headline and core basis, or 0.2% hotter than expected on both counts. The month-to-month gains were accompanied by acceleration on a YOY basis as well with core CPI up 6.0% from last year. This marks the 10th month of hot and rising inflation and puts increased pressure on the FOMC to act and act quickly. Fed President James Bullard came out with comments in the wake of data saying he favored 100 basis points of interest rate increases by June including a 50 basis point increase to start.

The SPX fell on the news, confirming resistance at the short-term moving average and the most recent peak in prices, putting the market in danger of a retest of the recent lows. If the market is not able to hold those lows a much deeper correction, perhaps as much as 10% more, could come within weeks.