FUNDAMENTAL OVERVIEW
The S&P 500 has been mostly rangebound since the last FOMC decision but with a bullish tilt. The only major catalyst we got since the FOMC decision was the NFP report. The data wasn’t bad, but it was enough to trigger a slightly dovish repricing in interest rate expectations.
The chances for a July hike are now standing at just 25%, while the probabilities for a move in September dropped to 57%. Given the Fed’s focus on inflation though, the US CPI will likely be more important. For now, the price action might remain rangebound until we get to the main event.
Upside surprises in the CPI report will likely trigger a selloff and take the S&P 500 back to the 7,200 level. Conversely, in line or lower than expected figures should keep supporting the market on lower Fed tightening risk.
This week, we don’t have much on the agenda. The only meaningful catalyst could be the FOMC meeting minutes tomorrow. This is almost never a market moving report but given the limited forward guidance from Fed Chair Warsh, traders will want to see if there’s any further signal in the minutes on the next policy move.
S&P 500 TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see the S&P 500 is slowly approaching the all-time highs around the 7,650 level. If the price gets there, we can expect the sellers to step in with a defined risk above it to position for a drop into the 7,200 support. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into new record highs.
S&P 500 TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we have an upward trendline defining the bullish momentum on this timeframe. The buyers will likely continue to lean on the trendline with a defined risk below it to keep pushing into new highs. The sellers, on the other hand, will look for a break lower to extend the pullback into the 7,480 level next.
S&P 500 TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, there’s not much we can add here as the buyers will have a better risk to reward setup around the trendline, while the sellers will need to wait for either a push into the resistance or a break below the trendline. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Tomorrow, we have the FOMC meeting minutes. On Thursday, we get the latest US Jobless Claims figures.
