Last Friday, the S&P 500 ended the day positive following the US NFP report. In fact, the data beat expectations across the board showing once again that the labour market remains resilient without too much inflationary pressure as wage growth continues to ease. The focus will now switch towards the US CPI data on Wednesday as a hot report could change the Fed's strategy in the near term and delay the rate cuts further.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 has been diverging with the MACD for a long time. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it led to pullbacks into the red 21 moving average and the trendline where the dip-buyers kept on stepping in to position for the rallies into new highs. The recent breakout though could be a bad omen for the buyers as it opened the door for a possible reversal, which will likely be confirmed or denied by the US CPI report on Wednesday.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price probed below the 5180 support but couldn’t sustain the bearish momentum as the buyers piled in more aggressively following the goldilocks NFP report last Friday. If the price were to continue lower and break below the support again, then we can expect the sellers to gain control and push the price to new lows with the 5100 level as the first target.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with the V-shaped recovery after the break below the 5180 support. A break above the 5223 level should see more buyers piling in to target new highs, while a break below the 5180 support will likely lead to another drop into new lows.
Upcoming Events
This week is going to be a bit more tranquil on the data front with the US CPI being the main highlight. On Wednesday, we have the US CPI report which will likely decide if the Fed is going to delay rate cuts further. On Thursday, we get the US PPI and the latest US Jobless Claims figures. Finally, on Friday we conclude the week with the University of Michigan Consumer Sentiment survey.
