Fundamental Overview
Yesterday, the Fed finally started its easing cycle and decided to do it with a 50 bps cut. The market was already leaning towards a 50 bps move, so it wasn’t a surprise.
The larger cut was framed as kind of an “insurance” cut with the dot plot showing two more 25 bps cuts by the end of the year and less than the market expected in 2025.
What’s important is that the Fed is cutting into a resilient economy which should lead to better growth expectations and support the stock market.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 after some short-term noise after the FOMC decision, rallied to a new all-time high. The buyers will now keep on buying the dips as long as the data continues to remain benign or, even better, improves.
This is not a market for the sellers, so they might want to wait for key breaks on the lower timeframes or better yet for recessionary catalysts before piling in.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have an upward trendline defining the current bullish momentum. We can expect the buyers to keep leaning on the trendline to position for new highs, while the sellers will look for a break lower to pile in for more downside.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the recent price action with the whipsaw on the Fed’s decision and then the rally overnight. There’s not much else we can glean from this timeframe as the buyers will look to buy the dips, while the sellers will wait for a bearish catalyst or a break below the trendline. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the latest US Jobless Claims figures which is the last important economic release of the week.