FUNDAMENTAL
OVERVIEW
The S&P 500 has been stuck
in a consolidation below the 7K level since Monday as traders awaited the US
NFP and CPI reports this week. We got the NFP report yesterday and it was a
hot one as it beat expectations by a big margin with the unemployment rate
falling further to 4.3% despite an increase in participation rate.
The market reacted
positively even though we got a slightly hawkish repricing as traders pared
back the total easing seen by year-end from 60 bps to 53 bps after the release.
This is in line with the current regime of good news being good news as long as
inflation continues to slowly head towards target.
Tomorrow, we will have an
important test as we get the US CPI report. In case we get soft data, we will
likely see the S&P 500 rallying into a new all-time high amid stabilising
labour market and easing inflation. On the other hand, a hot report will likely
trigger a stronger hawkish repricing and weigh on the market in the short-term.
S&P 500
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On
the daily chart, we can see that
the S&P 500 rallied strongly from
the December lows before pausing at the 7K level. If the price reaches the
all-time highs, we can expect the sellers to step in to position for a drop
back into the December lows. The buyers, on the other hand, will look for a
break higher to increase the bullish bets into new record highs.
S&P 500
TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On
the 4 hour chart, we can see more
clearly the rangebound price action. Traders will likely continue to play the
range until we get a breakout on either side which could come with the US CPI
report tomorrow.
S&P 500 TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, there’s
not much we can add here as the buyers will either pile in on a break above the
resistance or around the 6,921 low, while the sellers will look for shorts
around the all-time highs or on a break below the 6,921 low. The red lines
define the average daily range for today.
UPCOMING CATALYSTS
Today we get the US Jobless Claims figures, while
tomorrow we conclude the week with the US CPI report.
This article was written by Giuseppe Dellamotta at investinglive.com.
