Following
the big rally after the miss in the US CPI report, the market started to get
exhausted near a key swing high level. The data is still supporting the
soft-landing narrative as the US Retail Sales and Jobless Claims last
week surprised to the upside. The market may just be pulling back as we
approach the FOMC rate decision and there may be some profit taking or
defensive positioning going on. Nevertheless, it looks like as long as we keep
getting good economic data, the S&P 500 can keep on going up.
S&P 500 Technical
Analysis – Daily Timeframe
S&P 500 Daily
On the daily chart, we can see that the S&P 500
has been rallying non-stop since the bounce on the red 21 moving average and
broke out of the 4494 resistance
following the miss in the US CPI report. The price has now started to pull back
just before reaching the key 4628 high. Barring any negative news, we should
see the S&P 500 rallying back up into the 4628 high where we should find
strong sellers waiting to position for a big fall.
S&P 500 Technical
Analysis – 4 hour Timeframe
S&P 500 4 hour
On the 4 hour chart, we can see that since breaking
out of the ascending triangle pattern,
the S&P 500 surged towards the 4628 high with almost no pullbacks. The
bullish momentum weakened though as the moving averages have crossed to the
downside and the price may now retrace all the way back to the 4494 support.
S&P 500 Technical
Analysis – 1 hour Timeframe
S&P 500 1 hour
On the 1 hour chart, we can see that the
upward trendline has
been broken downwards as the bearish momentum prevailed and the price is now
testing a strong support level at 4560. The buyers should be leaning on this
level with a defined risk below it to position for another rally that would
hopefully break above the key 4628 resistance. The sellers, on the other hand,
will want to see the price breaking below the support to pile in and extend the
fall into the 4494 support.
Upcoming Events
This week we
will have many market moving events. We begin today with the US PMIs where we
may see the market rally in case the data beats expectations and falling in
case the data misses. Next, we will have the FOMC rate decision on Wednesday
where the Fed is expected to hike by 25 bps bringing the interest rates to
5.25-5.50%. On Thursday, it will be the time for another US Jobless Claims
report where a beat should be bullish for the market while a miss should be
bearish. Finally, we conclude the week with the US PCE and ECI reports where
the market would like to see softer numbers to confirm the soft-landing
narrative.