Last Friday, the NFP report massively beat forecasts with 336K jobs added against 170K expected. The unemployment rate remained unchanged at 3.8% and average hourly earnings were a touch lower. Overall, the market viewed it as a good release with the soft-landing narrative prevailing. Over the weekend, Hamas launched a big attack against Israel which might cause some risk aversion in the markets, although it's likely to be short-lived as long as the conflict remains in the Levant.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 rallied from the lower bound of the rising channel following the beat in the NFP report. The price reached the key support now turned resistance around the 4331 level where it got rejected into the close. Today, the S&P 500 is likely to open lower following the Hamas attack against Israel over the weekend, but as long as the conflict remains confined to Hamas and Israel the market is likely to ignore the events in the Levant.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price got rejected into the close from a very strong resistance where we had also the confluence with the 38.2% Fibonacci retracement level. The sellers are likely to defend this level and position for further downside with a defined risk above the level. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish momentum and target the downward trendline around the 4040 level.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we had a divergence with the MACD right at the bottom of the channel signalling a loss of bearish momentum. In case we see lower prices today, the buyers are likely to pile in around the previous swing high around the 4270 level with a defined risk below the low to target the 4040 level. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish pressure and target new lows.
Upcoming Events
This week we have some important inflation reports. On Wednesday, we will get the US PPI data and later in the day the FOMC Meeting Minutes. On Thursday, it will be the time for the main release of the week, that is the US CPI report, and at the same time we will see the latest Jobless Claims figures. Finally, on Friday we will get the University of Michigan Consumer Sentiment report.
See the video below