The S&P 500 index retreated from resistance at the 4,300 level on Monday. The move is consistent with expectations and the idea the market would enter a holding pattern ahead of the FOMC meeting. The FOMC meets next week and is expected to keep its interest rate policy unchanged from the 500 to 525 bps target it is set. The committee is also expected to maintain a hawkish posture and may indicate the need for additional rate hikes should the data indicate. Lucky for them and the market, the May read of the CPI index is due the day before the policy announcement. If the index confirms the upswing in inflation indicated by the last PCE price index, it may surprise the market with a hike.

The question for traders is what 4,300 mean to the S&P 500 index. It is a critical point of resistance that might not be crossed. In that situation, it will market the top of a trading range that could dominate the market for years. However, if the S&P 500 can move above it, a trading range is still the most likely scenario; only this time, 4,300 will mark the middle. Either way, the S&P 500 is in a rolling bear market that will impact price action for several years.