Fundamental Overview
The S&P 500 finally erased the entire drop from the last ISM Manufacturing PMI as the market faded the “growth scare”. The first catalyst was the good US Jobless Claims on the 8th of August as that quelled the fears on a deteriorating labour market triggered by the weak NFP report.
Last week, we got even better Jobless Claims figures and a great Retail Sales report which increased the bullish momentum. The market’s focus is now clearly on growth. This week, we will have two key events.
The first will be on Thursday as we will get the release of the US Flash PMIs for August and that will be kind of a test for the thesis that the July data was negatively affected by Hurricane Beryl. The second one will be Fed Chair Powell’s speech at the Jackson Hole Symposium where he will likely pre-commit to a rate cut in September.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 reached the key 5600 level where the growth scare began. 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 5200 level. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into a new all-time high.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a key support zone around the 5440 level where we can find the confluence of the 38.2% Fibonacci retracement level and the upward trendline. If we were to get a bigger pullback, the buyers will likely step in around that zone to position for a rally into new highs 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 5200 level.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor upward trendline defining the current bullish momentum. The buyers leant on this trendline on several occasions as they kept on targeting new highs. We can expect them to keep doing so, but if the price were to break lower and fall below the last higher low at 5535, the bearish momentum might increase as the sellers will pile in more aggressively for a drop into the 5440 support. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have Fed’s Waller speaking. On Thursday we get the US Jobless Claims figures and the US PMIs. On Friday we conclude with Fed Chair Powell speaking at the Jackson Hole Symposium.