Yesterday, the S&P 500 had a negative day as the US ADP data missed expectations which might have weighed on the sentiment heading into the NFP report tomorrow. There might also be a general profit taking ahead of the NFP data and the FOMC rate decision next week as the market might want some new strong catalyst to make new highs. In the bigger picture, the market generally peaks when the labour market weakens, and the unemployment rate starts to rise steadily, so the bulls should be very careful heading into the 2024.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 yesterday had a negative day as the sentiment might have deteriorated following the miss in the US ADP data heading into the NFP release tomorrow. The sellers continue to pile in around the cycle high targeting a bigger correction after the insane November rally. From a risk to reward perspective, the buyers should wait around the 4400 support where they will also find the 38.2% Fibonacci retracement level for confluence.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been diverging with the MACDinto the cycle high. This is generally a sign of weakening momentum often followed by pullbacks or reversals. This was another signal for the buyers to be extra careful around these levels as there was a high chance of a pullback. The 4540 level has been a good support recently with the buyers leaning on it to position for another rally. Unfortunately, they failed to make a new high and a break below the support is likely to trigger a selloff into the 4400 support next.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the divergence with the MACD, which has been going on since the breakout of the resistance at 4400. The buyers can try to lean on the 4540 level again to position for a rally, although the odds do not look good at the moment. The next supports will be the 4490 level and the 4400 zone, which is also going to be the last line of defence as a break below it will likely lead to another bear market.
Today we get the latest US Jobless Claims figures where the market will want to see how fast the US labour market is weakening. Tomorrow, we conclude the week with the US NFP report which is going to be a big market moving event.
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