Fundamental Overview
The S&P 500 yesterday rallied hard following the beat in the US ISM Services PMI where the data showed that the last month drop was just a blip and overall we have a resilient economy with lower inflationary pressures.
The data continues to reinforce the narrative that the next move is more likely to be a rate cut, and that inflation is likely to keep coming back to target. This should keep the market supported amid a positive risk sentiment.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 bounced recently around the 5200 level where we had the confluence of the trendline and the 50% Fibonacci retracement level.
That’s where the buyers piled in on the last day of the month fading the weakness from the month-end flows. The sellers will need the price to break below the trendline to turn the bias more bearish and start targeting a drop into the 5000 level.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price recently broke above the downward counter-trendline turning the bias more bullish and extended the rally after the break of the 5313 level. We are now seeing a bit of a rejection around the all-time high although there are no bearish catalysts expected for today, so if we get a pullback, it will likely be mostly technical.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see a good support zone around the 5330 level where we can find the confluence of the upward trendline and the 38.2% Fibonacci retracement level. If we get a pullback into the trendline we can expect the buyers to lean on it with a defined risk below it to position for a rally into new highs.
The sellers, on the other hand, will want to see the price breaking below the trendline and the 5313 level to position for a drop into the major trendline around the 5250 level. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the latest US Jobless Claims figures, while tomorrow we conclude the week with the US NFP report.