Fundamental Overview
We got some very good news last week as both the CPI and PPI came in on the softer side. This should support the stock market in the bigger picture as it will give the Fed more confidence to start cutting rates at some point in the last part of the year.
The FOMC decision last week turned out to be a bit more hawkish than expected but Fed Chair Powell made it clear that their forecasts can change as they remain very data dependent, so the market looked past the Fed’s projections.
The risk sentiment is still a bit murky, but it looks like the negative mood from the last week is starting to dissipate. We have the US Retail Sales data today where positive figures should give the market a boost and support the risk sentiment.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 keeps making all-time highs despite other risk assets finding it harder to rally. We got a strong push to the upside yesterday without any catalyst as the path of least resistance remains to the upside.
From a risk management perspective, the buyers will have a better risk to reward setup around the trendline where they will also find the confluence of the previous all-time high and the 61.8% Fibonacci retracement level. At the moment though, it’s unlikely that we will see such a big pullback unless we get some really ugly US data.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a good support zone around the 5450 level where we can find the confluence of a minor trendline and the 38.2% Fibonacci retracement level. If the price gets there, we can expect the buyers to lean on the trendline with a defined risk below it to position for another rally with a better risk to reward setup. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the next trendline around the 5350 level.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have another minor support around the 5510 level. If we get a dip into it on weak US Retail Sales data, the buyers might step in around there to fade the reaction and position for new highs. The sellers, on the other hand, will want to see a break to increase the bearish bets into the trendline around the 5450 level. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US Retail Sales and US Industrial Production. On Thursday, we get the US Housing Starts, Building Permits data and the latest US Jobless Claims figures. On Friday, we conclude the week with the and US PMIs.