Last week, the S&P 500 closed around the highs as the market continued to trade on the soft-landing narrative. In fact, despite the slightly higher than expected US CPI figures, the US Jobless Claims improved further and the US PPI data missed forecasts. Moreover, the Fedspeak has been generally neutral with no strong pushback against the market's rate cuts expectations. Today, the market will be closed for MLK Day, but we will have some important events throughout the week.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 ended the last week around the highs with the market continuing to see a goldilocks economy with falling inflation and stable employment and growth. We can expect the sellers to step in around the all-time high with a defined risk above it to position for a drop into the 4700 support first and upon a further break, target the 4547 level.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price is 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 might be another bearish confluence for the sellers and should give them a bit more conviction for a correction into the 4700 level. 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. The buyers will likely keep on leaning on the trendline to position for further upside. The sellers, on the other hand, will want to see the price breaking lower to pile in and target the 4700 support.
Upcoming Events
Tomorrow, all eyes will be on Fed's Waller as the market will be eager to see if he decides to pushback against the aggressive rate cuts expectations. On Wednesday, we will get the US Retail Sales report while on Thursday we will see the latest US Jobless Claims figures. Finally, on Friday, we conclude the week with the University of Michigan Consumer Sentiment survey.