SP500 Stays Below 200 DMA After US Fata

Earlier today, US data hit the markets - the employment cost index for the fourth quarter slowed to 1% from 1.4% previously. Moreover, the Fed's favorite inflation gauge advanced to 5.8% year-on-year, although analysts had expected 6.1%.

Lastly, personal spending crashed from 0.4% to -0.6% in December (despite the holiday season), while personal income also fell from 0.5% to 0.3% (real income fell further due to soaring inflation).

It looks like the significant support now stands at October lows near 4,280 USD, where the current bearish wave has stopped for now. As long as the index trades above it, chances are for a solid bounce, considering the vastly oversold conditions. 

In that scenario, the index might quickly jump toward the 200-day average (the green line) at 4,440 USD, where bears have so far defended it. 

Alternatively, a breakdown below 4,280 USD could hit stop-losses and send the index further lower, targeting 4,240 USD in the initial reaction.