Last Friday, the S&P 500 pulled back a bit after the incredibly strong Nvidia induced rally as we probably saw some profit taking. On the economic data side, we got another slate of strong data last Thursday with the US Jobless Claims and US PMIs beating expectations. The Fed members continue to repeat that they want to see a couple more of inflation reports before deciding on rate cuts, but they keep on reiterating that cuts are coming this year. Overall, the path of least resistance remains to the upside.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 eventually bounced on the red 21 moving average and rallied all the way up to make a new all-time high. There’s been lots of FOMO following the Nvidia earnings report but chasing the price at these levels doesn’t look like a good idea from a risk management perspective. In fact, the buyers would have a much better risk to reward setup around the trendline.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have now a good support zone around the 5040 level where we can find the confluence with the trendline, the 50% Fibonacci retracement level and the red 21 moving average. This is where we can expect the buyers to step in with a defined risk below the trendline to position for another rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a drop into the 4923 level.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the bullish setup around the 5040 level. What happens around this zone will likely decide where the price will go in the next few weeks.
Upcoming Events
This week we have some important economic data on the agenda. We begin tomorrow with the release of the US Consumer Confidence report. On Thursday, we will see the US PCE and the latest US Jobless Claims figures. Finally, on Friday, we conclude the week with the US ISM Manufacturing PMI.
