The market continues to march higher as the war in Israel hasn't spread to other Arab countries. In fact, yesterday the US intelligence has even reported that Iran was surprised by the Hamas attack. This has weighed on Crude Oil prices and eliminated the risk of a much bigger spike. Moreover, the US PPI report yesterday beat expectations, but it was mainly energy driven and the market brushed it aside as we got a big drop in Oil prices in October and even Fed's Waller sounded like a rate hike in November is not coming unless we get a very ugly CPI report.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 bounced strongly on the lower bound of the rising channel and it’s now eyeing the top trendline around the 4440 level. That’s where we can expect the sellers to step in with more conviction and a better risk to reward setup to position for another drop into the lows and targeting a breakout of the channel.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we had a strong resistance around the 4331 level where we had also the confluence with the 38.2% Fibonacci retracement level. The price broke through it with relative ease which raised the odds for further upside into the top trendline.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we got some key breaks in the past few days as the price rallied above the minor downward trendline and the 4331 resistance. The buyers kept on increasing the longs as more and more barriers were getting eliminated. Yesterday, we got a bounce from the red 21 moving average, and we can expect even more buyers coming into the market if the price breaks above the most recent high around the 4385 level. The sellers, on the other hand, will wait around the major downward trendline, but we might see them piling in already today if we get an ugly CPI report and the price breaks below the 4331 support.
Upcoming Events
Today we will get the most important report of the week, that is the US CPI report. The market is likely to focus on the core measures and react positively to lower than 0.4% monthly rate readings. At the same time, we will also see the latest US Jobless Claims data which is an important labour market report. Tomorrow, we conclude the week with the University of Michigan Consumer Sentiment report.
