Last week, the S&P 500 managed to hold into the gains from the prior week given another slate of goldilocks economic data with a pickup in the PMIs, a much better than expected GDP report and the Core PCE indicating that the inflation rate over the last 3 and 6 months data fell below the Fed’s 2% target. This week contains many risk events so we might see the market trading a bit on the defensive side, but barring any negative surprises, we will likely continue to see new higher highs.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 managed to close the last week around the highs. From a risk management perspective, the buyers will have a much better risk to reward setup at the trendline where they will also find the confluence with the red 21 moving average and the previous highs for support.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the bullish setup around the trendline where we can also find the Fibonacci retracement levels for extra confluence. This is where the buyers should step in with a defined risk below the support to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a drop into the 4700 level.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action and we can notice that the market has been diverging with the MACD recently. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it could be a signal for a pullback into the major trendline. If the price breaks below the minor trendline, the sellers will likely pile in for the pullback into the major trendline and ultimately target a break below it. The buyers, on the other hand, should wait for the price to come into the support zone and position for another rally.
Upcoming Events
This week is going to be a really busy one with the FOMC rate decision and lots of economic data on the agenda. We begin tomorrow with the US Job Openings and the US Consumer Confidence reports. On Wednesday we will see the US Employment Cost Index and the ADP data before the FOMC rate decision later in the day. On Thursday, we get the latest US Jobless Claims figures and the ISM Manufacturing PMI. Finally, on Friday, we conclude the week with the US NFP report.
