The S&P 500 last week jumped following the miss in the US CPI report and went into consolidation ever since. The market doesn't expect the Fed to hike anymore and it's pricing in the first rate cut in May 2024.
At the moment, it looks like the market is still trading based on inflation and interest rate expectations, but the softening in the labour market as seen with the last NFP and Jobless Claims last week, is gathering pace and it's something to keep a close eye on.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 went into consolidation just below a key swing level after the big jump triggered by the miss in the US CPI report. The rally was indeed overstretched 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 the price is now leaning on the upward trendline. This is where we can expect the buyers to step in with a defined risk below the trendline to position for a rally into the key swing level at 4543 looking for a breakout. The sellers, on the other hand, will want to see the price breaking lower to pile in and position for a drop back into the support around the 4400 level.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is diverging with the MACDnear the key swing level. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it could be a confirmation that we might indeed see a deeper pullback into the 4400 level. Watch out for what happens around these key levels.
Upcoming Events
This week is pretty empty on the data front with the US on holiday for Thanksgiving Day in the final part of the week. Tomorrow, we have the FOMC Meeting Minutes but it's unlikely to be market moving given that it's three-weeks old data. On Wednesday, we have the US Jobless Claims report which is probably going to be the most important release of the week. Finally, on Friday, we conclude the week with the latest US PMIs.
