Equities rebounded on Wednesday but it is too soon to call a bottom in the market. While the S&P 500 is moving up from the key 4,200 level the move is ahead of an important data point that could change the market's outlook. That data point is the PCE price index on Friday. The PCE Price index is expected to moderate on a sequential basis but still come in at a strong up .03% for the month and 5.3% from last year.

The risk for the market is that inflation will not moderate and there is no real reason to think it will. Not only is energy at the highest levels in a decade and driving input costs higher throughout the economy but producers and retailers are still trying to catch up with the last 12 months of inflation. If anything, the market should be prepared for a hot number and a chance the S&P 500 could break through support at 4,200 and make a move toward the 2,700 level.