Fundamental Overview
The S&P 500 has been stuck in a big range since the last
FOMC decision as the market perceived it as more hawkish than expected.
The Fed continues to place a great deal on inflation progress to proceed with further rate cuts as highlighted by
Fed’s Waller this week. Therefore, the market is waiting for more data to decide what the Fed is going to do next.
A soft CPI report next week will likely trigger a strong dovish reaction in the markets, especially considering the quick rise in Treasury yields in the last couple of months. That should support the stock market and lead to more gains. Conversely, another hot CPI isn’t going to help and could trigger another selloff.
Today, we have the US NFP report and although the CPI is going to have a bigger influence on interest rate expectations, it’s still going to be a market moving event, especially if we get big deviations from the expected numbers.
Right now, the market would want to see soft but not too soft data. A very bad or very hot report could add more pressure on the market. Watch also wage growth, as
Fed’s Bowman highlighted recently that it’s still above the pace consistent with their inflation target.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 continues to range between the 5855
support and the 6050 resistance as the market awaits the key US data. From a risk management perspective, the buyers will have a better risk to reward setup around the support to position for a rally into a new all-time high. The sellers, on the other hand, will want to see the price breaking lower to extend the drop into the major
trendline around the 5720 level.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, there’s not much else we can add here as the price action remains rangebound between the 5855 support and the 6050 resistance. It really all hinges on the upcoming US NFP and CPI reports.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price action has been compressing as we await the US NFP release. If the price stays above the 5960 level, that would be more bullish and will likely take us back to the 6050 resistance. Conversely, if the price stays below the 5920 level, the sellers will likely push the price into the support and target a break below it. The red lines define the
average daily range for today.
Upcoming Catalysts
Today we conclude the week with the US NFP report.
This article was written by Giuseppe Dellamotta at
www.forexlive.com.
