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Yesterday, the S&P 500 finished the day
positive as a big drop in the price index in the ISM Services PMI turned
the sentiment around and quelled some inflation fears. In fact, the market
stayed under pressure since the hot ISM Manufacturing PMI on
Monday as the increase in the price index renewed fears of a reacceleration in
inflation. For now, the market might take a sigh of relief, but all eyes then
will turn on the US CPI report next Wednesday.
S&P 500 Technical
Analysis – Daily Timeframe
S&P 500 Daily
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
recent breakout could turn into a fakeout if the price manages to rally back
above the trendline after the ISM Services PMI.
S&P 500 Technical
Analysis – 4 hour Timeframe
S&P 500 4 hour
On the 4 hour chart, we can see that the
price bounced on a strong support around
the 5200 level where we had the confluence of the
previous swing high level, the daily 21 moving average and the 38.2% Fibonacci
retracement level. The buyers will likely step in
here with a defined risk below the support to position for a rally into new
highs. The sellers, on the other hand, will want to see the price breaking
lower to pile in more aggressively and target the 5103 level.
S&P 500 Technical
Analysis – 1 hour Timeframe
S&P 500 1 hour
On the 1 hour chart, we can see more
closely the recent price action with the rejection of the broken trendline and
the bounce on the support zone. The buyers will want to see the price breaking
above the 5229 level to increase the bullish bets into new highs as a break
below the support would invalidate the setup and trigger a selloff into new
lows.
Upcoming Events
Today we will see the latest US Jobless Claims
figures, while tomorrow we conclude the week with the US NFP report.
