The S&P 500 surged to new highs following the miss in the US CPI report. Looks like the market is still trading based on the inflation and interest rates expectations and ignoring the softening in the labour market and growth data. Yesterday, the US Retail Sales were more tepid compared to the prior months, but they still came out better than expected, and the US PPI data missed forecasts by a big margin across the board. The bears are having a hard time to fight this positive sentiment and perhaps it will take a clear uptrend in the unemployment rate to switch the market’s focus.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 broke above the key trendline following the miss in the US CPI and it’s now near a swing point resistance. This rally looks overstretched as depicted by the price distance from the blue 8 moving average. In such instances, we can generally see a pullback into the moving average or some consolidation before the next move.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that in case of a pullback the buyers might want to lean on the upward trendline where they will also find the blue 8 moving average for confluence. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets and position for a drop into the 4400 support.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is diverging with the MACD, which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, the buyers will also find the 38.2% Fibonacci retracement level around the trendline for further confluence. If the price breaks below the trendline, the bullish setup would be invalidated and the reversal into the 4400 support would be confirmed.
Upcoming Events
Today the market’s focus will be on the latest US Jobless Claims figures given the recent softening in the labour market data.
See the video below
