Fundamental Overview
The S&P 500 has been stuck in a wide range since the last FOMC decision as a market experienced as more hawkish than expected.
The Fed continues to give a lot progress in inflation to continue further rate cuts as the Fed’s Waller pointed out this week. So the market is waiting for more data to decide what the Fed will do next.
A next week’s soft CPI report is likely to trigger a strong reaction in the markets, especially given the rapid rise in Treasury bond yields in recent months. This should support the stock market and lead to higher gains. Conversely, another hot CPI won’t help and could trigger another selloff.
Today we have the US NFP report and although it is CPI will have a greater impact on interest rate expectationsit will continue to be a market-moving event, especially if we get large deviations from expected numbers.
Right now, the market would like to see soft data, but not too soft. A a very bad or very hot report could add pressure to the market. Watch for wage growth as well, as the Fed’s Bowman recently emphasized that it remains above the pace consistent with their inflation target.
S&P 500 Technical Analysis – Daily Time Frame
S&P 500 daily
On the daily chart, we can see that the S&P 500 continues to move between 5855 support and 6050 resistance as the market awaits key data from the US. From a risk management perspective, buyers will have a better risk to reward setup around support positioning to hit a new all-time high. Sellers, on the other hand, will want to see the price decline to extend the decline into the main trendline around the 5720 level.
S&P 500 Technical Analysis – 4 Hour Time Frame
S&P 500 4 hrs
On the 4-hour chart, there is not much to add here as the price action remains in the range between the 5855 support and 6050 resistance. It really all depends on the upcoming US NFP and CPI reports.
S&P 500 Technical Analysis – 1 Hour Time Frame
S&P 500 1 hour
On the 1-hour chart, we can see that the price is decreasing as we await the US NFP release. If the price stays above the 5960 level, it would be more bullish and likely to take us back to the 6050 resistance. Conversely, if the price stays below the 5920 level, sellers are likely to push the price into 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.