Yesterday, the S&P 500 extended the drop into new lows despite a lack of bearish catalysts. In fact, we had pretty much a down day for most markets with selloffs in the US Dollar, Treasury yields and some commodities. On the geopolitical front, not much has changed as the Israeli retaliation continues to be delayed and it’s not even sure if they will strike at all now.
On the macro side, the market has priced out almost all the rate cuts in 2024 as it expects just one cut later in the year. On the data front, we don’t have much to work on in the next couple of weeks except the PCE, which the Fed has already indicated to be slightly higher but mostly unchanged.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 continues to rollover with the trend now looking clearly bearish as the price keeps on printing lower lows and lower highs with the moving averages being crossed to the downside. The sellers continue to pile in at every support break with the next one coming at 4946. The buyers, on the other hand, will need to break some key levels on the lower timeframes to start targeting new highs.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that from a risk management perspective, the sellers will have a much better risk to reward setup around the trendline where they will also find the confluence of the red 21 moving average and the 61.8% Fibonacci retracement level. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for a rally into a new all-time high.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor black trendline defining the current downward momentum with the red 21 moving average acting as dynamic resistance. This is where we can expect the sellers to step in again if we get a pullback into the trendline to position for a drop into the 4946 support. The buyers, on the other hand, will want to see the price breaking higher to pile in and target a rally into the trendline around the 5120 level.
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