Fundamental Overview
The S&P 500 has been on a great run since last Monday after the dovish Fed's Bowman comments and the end of the Israel-Iran conflict. The market continues to be supported by positive growth and liquidity drivers with financial conditions easing steadily. The path of least resistance remains to the upside given the expansionary fiscal policies and impending rate cuts.
In the short-term, the only risk I can see is a hawkish repricing in interest rates expectations which could provide a pullback. But given that the Fed's reaction function remains to either wait more or cut, the market should eventually get back to its upward trend.
We have key catalysts in the next two weeks including the ISM PMIs, the US NFP and the US CPI. The data will influence interest rates expectations and therefore the S&P 500’s price action.
To keep the trend going, we would likely need soft inflation figures and benign labour market data. Since the market is now leaning more towards three cuts by year-end, hawkish data would see that being repriced to two cuts.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 continues to print new all-time highs everyday as the bullish momentum remains intact. From a risk management perspective, the buyers will have a better risk to reward setup around the previous all-time high at 6,160-ish level to position for the continuation of the uptrend. The sellers, on the other hand, will want to see the price breaking lower to pile in for a drop into the 6,000 level next.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have an upward trendline defining the uptrend. If we were to get a pullback all the way into the trendline, we can expect the dip-buyers to lean on it to position for a rally into new all-time highs with a better risk to reward setup. The sellers, on the other hand, will look for a break lower to increase the bearish bets into the 5,800 level next.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor upward trendline defining the bullish momentum on this timeframe. The buyers will likely continue to lean on the trendline to keep pushing into new highs, while the sellers will look for a break below the trendline and the 6,160 zone to open the door for a deeper pullback.
Upcoming Catalysts
Tomorrow, we have the US ISM Manufacturing PMI and the US Job Openings. On Wednesday, we get the US ADP data. On Thursday, we conclude with the US NFP, the US Jobless Claims and the US ISM Services PMI before the US holiday on Friday.
This article was written by Giuseppe Dellamotta at www.forexlive.com. Read More Details
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