The soft-landing narrative is dominating the sentiment in the markets and it’s a big tailwind for the S&P 500. The big miss in the US CPI report last week triggered strong moves across the board and the FOMO kicked in. The US labour market remains strong, and the consumer sentiment jumped to new highs as seen in the University of Michigan report last Friday. There are no headwinds for the market at the moment, so all else being equal, we should see new highs coming soon.

S&P 500 Technical Analysis – Daily Timeframe

S&P 500 Technical Analysis
S&P 500 Daily

On the daily chart, we can see that since bouncing on the red 21 moving average, the S&P 500 managed to break above the 4494 resistance and make a new high following the miss in the US CPI report. The target for the buyers should be the 4628 level. That’s where we should find strong sellers stepping in and target a major pullback into a trendline.

S&P 500 Technical Analysis – 4 hour Timeframe

S&P 500 Technical Analysis
S&P 500 4 hour

On the 4 hour chart, we can see that the 4494 resistance coupled with the black trendline formed an ascending triangle pattern that was breached as the US CPI missed expectations. Generally, a breakout on either side leads to a strong momentum in the direction of the breakout. If we get a pullback to retest the broken resistance now turned support, we should see the buyers piling in near the 4494 level where we can also find the 38.2% Fibonacci retracement level. The sellers, on the other hand, will want to see the price breaking below the 4494 support to pile in more aggressively and target the 4324 level.

S&P 500 Technical Analysis – 1 hour Timeframe

S&P 500 Technical Analysis
S&P 500 1 hour

On the 1 hour chart, we can see that we have a minor blue trendline that may see aggressive buyers leaning on it to position for another rally into the 4628 level. From a risk management perspective, the 4500 level, where we have the confluence with the 38.2% Fibonacci retracement level, would offer a better risk to reward setup for the buyers. But given the FOMO in the market and no headwinds at the moment, we might see the S&P 500 going up already around these levels.

Upcoming Events

This week the main events are the US Retail Sales scheduled for tomorrow and the US Jobless Claims expected on Thursday. At the moment there’s a strong soft-landing narrative dominating the sentiment in the markets, so only very ugly reports should trigger bigger selloffs, while minor misses may be opportunities to buy the dips.

See also the video below: