Fundamental Overview
The strong US NFP report last Friday led to some defensive risk sentiment in the S&P 500 as we head into the US CPI and FOMC decision tomorrow. In the big picture, the data didn’t change much but it added a bit of uncertainty into the market which is now waiting for the US CPI to clear it out.
In case the US CPI comes out soft, we can expect the S&P 500 extending the rally into new highs. On the other hand, a hot report will likely trigger a selloff as the market will want to err on the cautious side into the FOMC decision.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 reached a new all-time high recently around the 5385 level where it consolidated as the strong US NFP report brought some uncertainty in the market.
From a risk management perspective, the buyers will have a better risk to reward setup around the trendline although we will likely need a hot US CPI report tomorrow to trigger such a pullback. The sellers, on the other hand, will want to see the price breaking below the trendline to start targeting the 5000 level.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price recently broke below the minor trendline which was defining the bullish momentum from the 5200 level. The price consolidated ever since and the first target for the pullback should be around the 5313 support where we can also find the 38.2% Fibonacci retracement level of the entire rally. A break below that level will likely take us into the major trendline around the 5280 level where we have the 61.8% Fibonacci retracement level.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the consolidation around the highs with the 5372 level acting as a strong resistance. A break above it should see the buyers gaining more conviction and increasing the bullish bets into new highs. For now though, it looks like we could keep consolidating until tomorrow’s big events. The red lines define the average daily range for today.
Upcoming Catalysts
This week is a bit empty on the data front although we will have the biggest market moving events tomorrow when we get the US CPI data and the FOMC rate decision. On Thursday, we have the US PPI and the latest US Jobless Claims figures. On Friday, we conclude the week with the University of Michigan Consumer Sentiment survey.
