Yesterday, the S&P 500 dropped following the big beat in the US PMIs as the rise in Treasury yields weighed on the market. The data was still in support of the soft-landing narrative with the commentary in the PMI report citing fastest output growth in seven months and sharp cooling in inflation. Given the resilience of the labour market and consumer spending, the rate cuts continue to be pushed back a little, but as long as the disinflationary trend remains intact, we can expect the Fed to proceed with the “insurance” cuts anyway.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 closed the day negative yesterday as rising Treasury yields started to weigh on the market. The price was overstretched anyway as depicted by the 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 we have a strong support zone around the previous high at the 4800 level where we can also find the confluence with the red 21 moving average and the 61.8% Fibonacci retracement level. This is where we can expect the buyers to step in to position for a rally into another all-time high. The sellers, on the other hand, will need to see the price breaking below the trendline before gaining more conviction for a bigger drop.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with the market yesterday falling into the close. We can see that the price is at a trendline where we have also the red 21 moving average for confluence. Aggressive buyers might already try to step in here with a defined risk below the trendline and position for another rally. The sellers, on the other hand, will want to see the price breaking lower to pile in and target a drop into the 4800 support.
Upcoming Events
Today we will see the Advance US Q4 GDP and the latest US Jobless Claims figures. Tomorrow, we conclude the week with the US PCE report.
