Last Friday, the S&P 500 rallied strongly for no apparent reason with the market seemingly careless about the US CPI release tomorrow. Overall, the path of least resistance remains to the upside given the pickup in economic data with even the leading indicators turning around. There are still risks on the inflation front though, but the market looks confident that even if we see some short-term reacceleration, the Fed will just keep rates steady and if the economy is able to support them, then it might be even better. Nonetheless, a hot CPI report could provide a pullback, so that would be something to watch out for.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 continues to surge to new highs with very shallow pullbacks. From a risk management perspective, the buyers will have a much better risk to reward setup around the trendline where they will also find the red 21 moving average for confluence. The sellers, on the other hand, will need the price to break below the trendline to change the overall bias from bullish to bearish.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have some more confluence around the trendline as there are also the Fibonacci retracement levels. We can also notice that the price at the moment is a bit 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 – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor trendline defining the current uptrend with the red 21 moving average acting as dynamic support. The buyers might keep on leaning on this trendline to position for new highs but if we get a break to the downside, the sellers will likely pile in to target a pullback into the major trendline.
This week is relatively light on the data front with the US CPI report being the main highlight. We start tomorrow with the release of the US CPI where the market will want to see if there are indeed signs of a reacceleration or not. On Thursday, we will get the latest US Jobless Claims figures, while on Friday we conclude the week with the US PPI and the University of Michigan Consumer Sentiment survey.