Last week, the market remained under pressure as
the more hawkish than expected FOMC dot plot was
still fresh in everyone’s mind. The economic data continues to support the
soft-landing narrative with Jobless Claims showing
a solid labour market and Core PCE trending
downwards. The last day of the week, we got a small bounce across the board as
the market took a breather after the heavy selloff after the FOMC meeting. We
will see if it was just a pullback or the start of a new rally.
S&P 500 Technical
Analysis – Daily Timeframe
S&P 500 Daily
On the daily chart, we can see that the S&P 500
bounced almost perfectly on a key trendline, which
is also the lower bound of the rising channel. The price rallied into the
previous support turned resistance and the
blue 8 moving average where it
found strong sellers and fell into the close. The question now is: was this
just a pullback or the start of a new rally?
S&P 500 Technical
Analysis – 4 hour Timeframe
S&P 500 4 hour
On the 4 hour chart, we can see more closely the resistance around
the 4331 level where we had the confluence of the
38.2% Fibonacci retracement level
and the red 21 moving average. If the price breaks above this resistance, then
we will likely see a rally into the downward trendline around the 4450 level. A
break below the key upward trendline, on the other hand, will open the door for
much lower prices.
S&P 500 Technical
Analysis – 1 hour Timeframe
S&P 500 1 hour
On the 1 hour chart, we can see that we
had a divergence with
the MACD right
into the key trendline, which is generally a sign of weakening momentum often
followed by pullbacks or reversals. The price indeed pulled back into the
resistance zone where we can find even more confluence on this timeframe as we
have the downward trendline and another 38.2% Fibonacci retracement level. If
the price pulls back again into the resistance, the sellers are likely to step
in with a defined risk above the trendline to target a break below the key upward
trendline. The buyers, on the other hand, will want to see the price breaking
higher to pile in and position for a rally into the downward trendline around
the 4450 level.
Upcoming Events
This week we have many key economic releases that will
culminate in the NFP report on Friday. Today, we will see the latest ISM
Manufacturing PMI. Tomorrow, we will have the Job Openings data which led to a
strong rally the last time as the big miss was interpreted as a good thing due
to less labour market tightness and less hawkish Fed. On Wednesday, it will be
the time for the ADP report and the ISM Services PMI. On Thursday, we will see
the Jobless Claims data, which continues to show a solid labour market. Finally
on Friday, it will be the time for the NFP report which is the only one the Fed
will see before its next rate decision.
See also the video below