The rebounded from its initial downside targets near 5000, moving back above the March-April pattern breakdown area and the 50-day moving average.

According to JPMorgan technical strategists, this move disrupted the tactical bearish trend momentum, creating a more ambiguous short-term technical setup, while preserving the medium-term rally structure.

“The market is showing signs of tactical rally deceleration near the 5219 Oct 2022-Oct 2023 equal swings and 5261 Mar peak,” strategists said in a Tuesday note.

“That price action leaves us looking for that zone to continue to cap the current range, but we recognize that tomorrow’s CPI print will likely determine how the market responds to that resistance,” they continued.

To derail the April-May rebound, a tactical break below the 5064-5145 range is needed, JPMorgan highlighted.

On a broader scale, low-frequency price patterns and cross-market signals related to the duration of the yield curve inversion suggest a potential for medium-term rally exhaustion.

Strategists suspect the current range may evolve into a distribution pattern, with key support around 5000. A failed attempt to sustain a break above the March peak of 5261, followed by a drop below the 50-day moving average at 5145, “would add material conviction to that view,” they noted.

“Alternatively, an unexpected rally acceleration from current levels would turn our attention to the 5414 Oct 2022-Oct 2023 equal swings objective (in percentage terms) as the resistance level,” said JPMorgan’s team.

The S&P 500 closed at 5246 on Wednesday, sitting just 0.2% below its all-time highs.