Fundamental Overview
Last Friday, Fed Chair Powell delivered a more dovish than expected speech at the Jackson Hole Symposium as he basically kept the door open for a 50 bps cut at the September meeting. The line saying that they will do everything they can to support a strong labour market was key.
Despite this, the S&P 500 failed to rally sustainably. The culprit could be related to something that we’ve already seen in the first week of July. In fact, the Russell 2000 extended the gains into new highs outperforming the major indexes, which suggests that the lack of follow through from the S&P 500 could be related to rotation.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 broke through the 5600 level and consolidated right above it. The buyers remain in control and will certainly target a new all-time high. The 5600 level is now a strong support zone and the sellers will need the price to fall below it to regain some control and position for a drop back into the 5200 level.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we had a quick drop into the 5600 support last Thursday following the Flash US PMIs where the Manufacturing PMI fell further into contraction and might have triggered some profit-taking.
The dip-buyers piled in around the support to position for a rally into a new all-time high. If we were to get a deeper pullback, the buyers will likely lean on the trendline around the 5550 level, while the sellers will look for a break below it to increase the bearish bets into new lows.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a resistance zone around the 5660 level where the price got rejected from several times in the past days. The buyers will want to see the price breaking higher to increase the bullish bets into a new all-time high, while the sellers will likely lean on it to position for a drop back into the 5600 support. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we have the US Consumer Confidence report. On Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude with the US PCE report.