Fundamental Overview
The S&P 500 reached a new all-time high last Friday despite the higher-than-expected US CPI and PPI reports. The Fed targets the PCE though and the Core PCE Y/Y is now expected to tick lower to 2.6%.
The market has now priced out the aggressive rate cuts expectations and it’s almost perfectly in line with the Fed’s projections. Therefore, we will continue to see rate cuts into a resilient economy, which is a bullish driver for the stock market.
Also, as a reminder, the Fed’s reaction function has changed, so stronger data will just potentially cause a pause in the easing cycle at most. They are not even thinking about tightening anymore. The next big risk event for the market will be the US election in November.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 rallied to a new all-time high last Friday as the market continues to push higher on the Fed cutting rates into a resilient economy.
If we get a deeper pullback, we can expect the buyers to lean on the trendline with a defined risk below it to position for a rally into a new all-time high. The sellers, on the other hand, will want to see the price breaking below the trendline to start targeting a drop into the 5400 level.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we recently had some consolidation around the previous all-time high but eventually the price rallied into a new high. We now have a strong support zone around the 5820 level where we can find the swing low and the 38.2% Fibonacci retracement level.
If the price pulls back into the support, we can expect the buyers to step in with a defined risk below the swing low to position for a rally into a new all-time high. The sellers, on the other hand, will want to see the price breaking lower to pile in for a drop into the 5720 level.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor support zone around the 5845 level where we can find the confluence of the minor upward trendline and the previous resistance now turned support.
This is where we can expect the buyers to step in with a defined risk below the trendline to position for more upside, while the sellers will look for a break lower to target a drop into the 5820 support. The red lines define the average daily range for today.
Upcoming Catalysts
This week is pretty empty on the data front with just a couple of key economic releases. Today, we have Fed’s Waller speaking, while on Thursday, we get the US Retail Sales and US Jobless Claims data.
