We noted on July 27th that the summer rally has potentially begun, and noted last week on July 3rd that S&P 500 is likely bottoming out. Currently, the summer rally is nearing the first resistance at 50dma. This will be the major test for stocks next week.

Fundamentally, next week on July 13th, the release of the CPI inflation report will be the key trigger. Given the sharp correction in commodity prices, particularly energy, the CPI could surprise to the downside, which could lower the monetary policy tightening expectations and push the stocks above the resistance level.

Here is the full report.