Fundamental Overview
Yesterday, we got the US CPI report and, although as expected it didn’t have the same large impact as it used to, the core m/m figure surprised to the upside.
The data triggered a repricing in interest rates expectations with the market now seeing just a 13% probability of a 50 bps cut at the upcoming FOMC meeting and less easing further out the curve.
That weighed on the market initially but as soon as the European session came to an end, we saw an incredible reversal that pushed the price above the US NFP high of last Friday.
Right now, it looks like the Fed is going to cut rates into a resilient economy, which is generally a positive driver for the stock market but keep an eye on the growth and labour market data as the market has become very sensitive to soft figures on that front.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 yesterday rallied above the post NFP high which could be a signal of further upside in the next weeks. The price is now back inside the old range between the 5560 support and 5665 resistance.
We can expect the buyers to start targeting the resistance as long as the price stays above the support. The sellers, on the other hand, will want to see the price falling back below the range to position for new lows.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the price getting inside the old range. We are now seeing a bit of a consolidation after yesterday’s one way move and today’s data might either push the price further to the upside or we could see a pullback into the 5506 level.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the rally paused just above the 5560 level. If the price were to fall below the level, we can expect the sellers to pile in to target a pullback into the 5506 level. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the latest US Jobless Claims figures and the US PPI data. Tomorrow, we conclude the week with the University of Michigan Consumer Sentiment report.