Yesterday, the S&P 500 remained on the back foot as the correction that began last week seems to have more room to go. As of now, the data has been overall positive with the US ISM Manufacturing PMI beating expectations and US Job Openings missing forecasts. Moreover, yesterday we got a beat in the US ADP and US Jobless Claims data. If the data remains positive, we can expect the market to bounce back once the froth from the aggressive rate cuts expectations gets unwound. Today, is an important day as we get the release of the US NFP and the US ISM Services PMI.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 yesterday broke below a key support where we had the confluence of the recent swing low and the 21 moving average. This has opened the door for an even bigger drop into the next support around the 4547 level. The sellers should have even more conviction now while the buyers will need the price to rise back above the 4700 level to regain some control.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been trading inside a rising channel but the price eventually broke not only below the lower bound of the channel but also below the key support around the 4700 level where we had also the 38.2% Fibonacci retracement level for confluence. We can also notice that the latest leg higher diverged with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we got a reversal signal and the target should be right at the 4547 level.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the current price action with the recent break below the 4700 support. The sellers should keep piling in around these levels with the lower high around the 4726 level as the last line of defence. In fact, if the price breaks above the 4726 level, the recent downtrend would be broken and the buyers should regain control.
