Fundamental Overview
The upward momentum in the S&P 500 has been kept at bay recently as the goldilocks data triggered a strong rotation into small caps stocks with the Russell 2000 having its best week in 24 years.
It also looks like the rotation has been driven by hedge funds facing short squeezes on their small cap hedges as yields come down. This is just internal market dynamics as the fundamentals have not changed.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that in case we get a deeper pullback, the buyers will find a good support zone around the 5500 level where we can find the confluence of the trendline and the 38.2% Fibonacci retracement level. The sellers, on the other hand, will want to see the price breaking below the trendline to increase the bearish bets into the 5200 level next. As of now though, there are no reasons to expect such a big pullback.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have another minor trendline defining the current bullish momentum. We can expect the buyers to lean on this trendline with a defined risk below it to position for new all-time highs with a better risk to reward setup. The sellers, on the other hand, will want to see the price breaking below the trendline to position for a drop into the 5500 level next.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we’ve been having a rangebound price action recently as rotation into small caps stocks kept the momentum at bay. The bias remains bullish nonetheless and we have key levels where the buyers can limit their risk. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have Fed’s Waller speaking while tomorrow we conclude with the latest US Jobless Claims figures.