The soft-landing narrative is dominating the sentiment in the markets and it’s a big tailwind for the S&P 500. The big miss in the US CPI report last week triggered strong moves across the board with some FOMO kicking in. The US labour market remains strong, and the consumer sentiment jumped to new highs as seen in the University of Michigan report last Friday. The Retail Sales missed on the headline number but the Control Group, which is a more precise method of gauging consumer spending, beat expectations. Overall, the data is still solid and should support the S&P 500 for the time being.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the buyers leant on the red 21 moving average to position for a breakout of the 4494 resistance. The S&P 500 eventually broke out as the US CPI missed expectations and triggered a big rally into the 4628 level. It looks like nothing can stop this market at the moment as the Fed is seen ending its tightening cycle at the July meeting, the US inflation continues to miss expectations and the other data shows a resilient economy.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we had an ascending triangle pattern that eventually broke out to the upside and led to a rally towards the 4628 high. We can see that the buyers leant on the red 21 moving average on the last notable dip, and they are now eyeing the 4628 resistance. That’s where we should see strong sellers stepping in with a defined risk above the level and target the 4494 support.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we also have a trendline defining this current uptrend into the 4628 level. The buyers should lean on this trendline to position again for another extension to the upside. The sellers, on the other hand, will want to see the price breaking below the trendline to pile in and extend the fall into the 4494 support.
Upcoming Events
Today we have the US Jobless Claims report, which is a leading indicator for the labour market. Given the soft-landing vibes, a small miss to the expectations shouldn’t cause too much damage, and in fact it might be just an opportunity to buy the dip. Higher than expected numbers should support the market even more, while a big miss might trigger recessionary fears and lead to a bigger selloff.