Threats of two or more rate hikes from the Fed members haven’t spooked the S&P 500, which kept on rallying as good data coupled with constant disinflation brought back soft-landing vibes. We got an ugly ISM Manufacturing PMI on Monday which registered contraction across the board. This is something that happened only in recessions, but the market seems focused more on the hard data now as the soft data has been signalling a recession for a long time without confirmations from the hard data.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 rallied back into the 4494 high but couldn’t break it. The price, in fact, pulled back as soon as it tested the high. From a risk management perspective, the buyers would be better off waiting for the price to fall into the 4324 support where we can also find the 38.2% Fibonacci retracement level and the trendline. That would be a good spot where they can pile in with a defined risk below the trendline and target a new high.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the upside momentum has waned as the price broke below the minor upward trendline and the moving averages have crossed to the downside. The target for the sellers should be the 4324 support, where they should find strong buyers stepping in to target new highs. Alternatively, we might see the S&P 500 rebound again and breaking above the high, in which case the buyers should pile in with a risk below the level and target the 4628 resistance.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is now testing the recent swing low. If we see a clear break below the swing point, we should see more sellers piling in to extend the selloff into the 4324 support. The buyers, on the other hand, should wait for the price to take out the high first before piling in for another bullish wave or wait for the price to reach the 4324 support.
Upcoming Events
Today we have the US Jobless Claims and the ISM Services PMI on the agenda while tomorrow we’ll have the main event of the week: the US NFP. Strong economic data has been supporting the S&P 500 so we might expect the same if we get good data. On the other hand, bad data may bring back recession fears and send the market lower.
See also the video below:
