Yesterday, the S&P 500 extended the gains as the market continues to trade into the CPI release today probably expecting good inflation figures. This raises the risk of a bigger selloff in case the data surprises to the upside given that we should also see Treasury yields rising and the aggressive rate cuts expectations getting trimmed. At the same time, we will see the latest Jobless Claims figures and that will also be something to factor in as strong numbers might double down on a hot CPI report. The best-case scenario for the S&P 500 is probably benign inflation data and not too weak Jobless Claims.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 eventually bounced on the swing level around the 4700 level where we had also the red 21 moving average for confluence. The price is now approaching the all-time high and we might see it breaking it today with the key economic data releases on the agenda. The sellers are likely to step in around the all-time high with a defined risk above it to position for a drop back into the 4700 level.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can notice that we will likely see the price diverging with the MACD right at the all-time high. This is generally a sign of weakening momentum often followed by pullbacks or reversals. This is another bearish confluence for the sellers and should give them a bit more conviction, although the data might invalidate the setup. The buyers, on the other hand, will likely increase the bullish bets on a break of the all-time high.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the current price action and we can see that we have a minor trendline defining the current bullish momentum. If the price spikes to the upside and then breaks below the trendline, we can expect the sellers to increase the bearish bets into the 4700 support. The buyers, on the other hand, will likely lean on the trendline and the 21 moving average to position for another rally.
