The miss in the ADP report
yesterday gave the market a bit of relief after a series of strong economic
data like Jobless Claims, ISM Manufacturing PMI and Job Openings. The ISM services PMI has also
printed bang on expectations, and coupled with the other reports, supports the
soft-landing narrative. Moreover, the market was also helped by the fall in
Treasury yields and Oil prices which might calm the fears of another inflationary
wave. Technically, we are also around key levels and the selloff after the more
hawkish than expected FOMC dot plot might
need at least a correction.
S&P 500 Technical
Analysis – Daily Timeframe
S&P 500 Daily
On the daily chart, we can see that the S&P 500
bounced again on the key trendline near the
50% Fibonacci retracement level of
the entire rally since March. This is where the buyers are likely to pile in
with a defined risk below the low to position for a rally into the downward
trendline around the 4430 level. The sellers, on the other hand, will want to
see the price continuing lower and breaking below the key support around
the 4194 level to position for a bigger drop into the 3808 level.
S&P 500 Technical
Analysis – 4 hour Timeframe
S&P 500 4 hour
On the 4 hour chart, we can see that the latest leg
lower diverged with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, the sellers are likely to lean on the red 21 moving average and the
4331 resistance where we have also the 38.2% Fibonacci retracement level for confluence. If the
price breaks above the 4331 resistance, the buyers will gain even more
conviction and likely take the S&P 500 into the black downward trendline.
S&P 500 Technical
Analysis – 1 hour Timeframe
S&P 500 1 hour
On the 1 hour chart, we can see more
closely the bearish setup with the trendline adding an extra layer of
confluence to the 4-hour 21 moving average. The sellers might want to split
their orders between the trendline and the 4331 resistance as there’s a high
chance that both work out depending on the data in the next couple of days. The
buyers, on the other hand, will be focused on the 4331 resistance as a break of
that level will open the door for higher prices.
Upcoming Events
Today we have the Jobless Claims report, which
continues to show a solid labour market and given the reaction to the miss in
the ADP yesterday, we can expect a rally in case of a miss and a drop in case
of a beat. Tomorrow, it will be the time for the NFP report which is the only
one the Fed will see before its next rate decision.
See the video below: