On the daily chart below, we can see that the S&P 500 has gapped up at the futures open as McCarthy and Biden announced a debt ceiling deal over the weekend. This isn’t a surprise as the US has always raised the debt ceiling eventually. Nonetheless, the market this time may have been a bit more worried and the last week positive headlines on the deal gave the S&P 500 a boost.

This may turn into a classic “buy the rumour, sell the fact” trade and the technicals can help with that. The price has closed the gap in overnight trading, and we will need to see another failure to confirm that this may indeed be a “sell the fact” type of trade. If this isn’t the case, then we should see the S&P 500 rallying all the way up to the 4324 resistance.

S&P 500 Technical Analysis

In the 4 hour chart below, we can see that last Friday the S&P 500 rallied into the weekend as we got positive headlines on the debt ceiling deal and the market positioned for a possible deal over the weekend. This strong rally took out also the previous high but got a bit overstretched, as depicted by the distance from the blue 8 period moving average. Generally, in such instances, the price consolidates or pulls back before another push into the original direction.

In the 1 hour chart below, we can see that a possible pullback may bounce from the 4207 level where we can also find confluence with the 38.2% Fibonacci retracement level and the red 21 period moving average. The buyers are likely to lean on this level with defined risk just below it. The sellers, on the other hand, will want to see the price to fall below the 4175 level to confirm the “sell the fact” trade and target the 4120 support first and 4061 level next.