Fundamental Overview
The S&P 500 bounced strongly from the lows last week following the good US Jobless Claims figures as the data quelled some of the fears around the labour market after the weak US NFP report.
That’s been also evident from the market pricing for rate cuts as expectations for a 50 bps cut in September kept on being pared back with now a 25 bps move seen as more likely. Moreover, the Japanese markets shouldn’t be a problem anymore given that the Japanese officials made it pretty clear that they won’t proceed with more tightening given the recent volatility in the markets.
All of the above contributed to a more positive risk sentiment in the market with the focus now on the US CPI report tomorrow where benign figures will likely give the bulls some more support.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 bounced around the swing low level at 5200 and extended the gains following the good US jobless claims figures. The price is now approaching a key resistance around the 5430 level where we can also find the 61.8% Fibonacci retracement level for confluence.
This is where we can expect the sellers to step in with a defined risk above the level to position for a drop back into the lows. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the major trendline targeting a breakout.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price recently broke above the strong resistance around the 5366 level and extended the gains as more buyers piled in. The price action has been tentative though as we head into the US CPI report tomorrow.
If we get a bigger pullback, the buyers will likely lean on the upward trendline around the 5270 level to position for a rally into the major downward trendline. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the lows.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the recent price action. There’s not much we can glean from this timeframe as market participants will wait for a catalysts or the price reaching the key levels. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the US PPI data. Tomorrow, we have the US CPI report. On Thursday, we get the US Retail Sales and Jobless Claims figures. Finally, on Friday, we conclude the week with the University of Michigan Consumer Sentiment survey.
