Last week, the S&P 500 finished on a positive note as the lack of bearish catalysts kept the market supported. Today, the futures market opened higher following the good PCE report last Friday when the market was closed for holidays. Therefore, we can expect to see a positive gap at the open. Overall, the path of least resistance remains to the upside with the main two risks for the bullish sentiment being a reacceleration in inflation leading to a hawkish Fed or a hard landing.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 has been diverging with the MACD for a long time. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it led to pullbacks into the red 21 moving average and the trendline where the dip-buyers kept on stepping in to position for the rallies into new highs. The sellers might want to wait for the price to break below the trendline before considering going short.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that from a risk management perspective, the buyers will have a much better risk to reward setup around the trendline where we can also find the confluence with the red 21 moving average. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a bigger correction to the downside.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is now trading right around the all-time high and we might see it open higher today as we saw a positive gap at the open of the futures market. Aggressive buyers might pile in already at the open to position for new highs and fold as soon as the price falls back below the 5260 level waiting to buy the dip around the trendline.
Upcoming Events
This week we get the release of many key economic data. We begin today with the US ISM Manufacturing PMI. Tomorrow, we have the US Job Openings. On Wednesday, we get the US ADP and the US ISM Services PMI data. On Thursday, we will see the latest US Jobless Claims figures, while on Friday we conclude with the US NFP report.
