Last week
was the Jackson Hole Symposium week and we
have heard from many Fed members about their opinions on the momentary policy
going forward. There seems to be a consensus for a pause in September as they
try to “carefully” assess the lag effects of their tightening to date.
Nonetheless, they are ready to do more if conditions require further tightening
and in fact, they keep reaffirming their data dependency. The economic data
since the last FOMC meeting has been surprising to the upside with the labour
market remaining very strong, but the last two inflation reports showed the Core M/M
inflation rising by just 0.16%. Overall, it looks like a soft landing scenario
but the latest US PMIs showed
that there might be pain ahead.
S&P 500 Technical
Analysis – Daily Timeframe
S&P 500 Daily
On the daily chart, we can see that the S&P 500
bounced around the key support at 4324
and rallied into the red 21 moving average. The
sellers were waiting for this pullback leaning on the moving average and pushed
the price lower again targeting a break below the support level. The bias for
now remains bearish as the price has been printing lower lows and lower highs
and the moving averages are crossed to the downside.
S&P 500 Technical
Analysis – 4 hour Timeframe
S&P 500 4 hour
On the 4 hour chart, we can see that we got a
breakout of the downward trendline into the
4494 resistance and then a quick selloff back below the trendline. This might
have been a fakeout and generally what follows is a continuation of the
original trend. Therefore, the buyers will need to break above the trendline
again to invalidate the bearish setup and position for a rally into the 4494
level again.
S&P 500 Technical
Analysis – 1 hour Timeframe
S&P 500 1 hour
On the 1 hour chart, we can see that the
quick selloff from the 4494 resistance broke through the black
counter-trendline with the price then extending the drop towards the previous
low. We got another pullback into the downward trendline where we can also find
the 50% Fibonacci
retracement level for confluence. This
is where we can expect the sellers piling in with a defined risk above the
level to target the 4324 support first and eventually new lows. The buyers, on
the other hand, will need to break above the trendline to invalidate the
bearish setup and push the price to new highs.
Upcoming Events
This week is an important one given that we will see
many key labour market data, including the US NFP, before the next FOMC
meeting. We start tomorrow with the US Consumer Confidence and the US Job
Openings. On Wednesday, we have the US ADP report. Moving on to Thursday, we
will have the US Jobless Claims and the US PCE data. Finally, we conclude the
week with the US NFP and the ISM Manufacturing PMI on Friday. Although the Fed
keeps all the options on the table, it’s also leaning more towards a pause in
September, so we will need strong data to make the market to expect a hike at
the upcoming meeting.
See also the video below