Equity markets tried to move higher for a 2nd day this week only to have the move reversed by midday. The price action is hopeful but weak in the face of mounting bearishness centered on inflation, interest rates, and their impact on the outlook for earnings. A report from Target confirmed again what everyone fears, the wave of strength brought on by the pandemic is fading quickly, and the pullback in consumer spending is about to begin.

The S&P 500 is at a critical juncture. If the index can not regain firm footing by the end of the week, it is in danger of a more profound decline. The action so far this week shows resistance at the short-term moving average and growing bearishness among short-term traders. In the even the index deepens its decline, the next targets for firm support are near 3,900 and 3,800.