FUNDAMENTAL
OVERVIEW
The S&P 500 spiked into
the 6,750 level following Trump’s ceasefire announcement on Monday but eventually
gave back most of the gains after the Iranian side denied Trump’s claims and
yesterday officially rejected the ceasefire proposal.
Overall, the market is now
consolidating as Trump’s push towards a deal despite Iranian pushback, keeps
the hope alive. Nonetheless, there’s a risk that this was just the usual jawboning
strategy to calm markets while the US prepares of a ground invasion.
In fact, Trump’s announcement
came right after the US stock indices were flirting with key downside breakouts,
Treasury yields were surging into new highs and oil prices were rising into
triple digit territory.
If the war
escalates further and we get the news of a ground invasion, we will likely see
the S&P 500 breaking into new lows. On the other hand, if Trump decides to
pull back militarily and end the hostilities, we should get a strong relief
rally which could mark the start of a move into new all-time highs.
For now, the risk
of a ground invasion will keep the market under pressure and we will likely see
defensive hedging into the weekend barring a surprising deal or end of the war.
S&P 500
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On
the daily chart, we can see that
the S&P 500 spiked into the 6,750 level
where the sellers stepped in with a defined risk above the resistance to
position for a drop back into the 6,525 support. If the price gets there, we
can expect the buyers to pile in with a defined risk below the support to target
a pullback into the downward trendline.
S&P 500 TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On
the 4 hour chart, there’s not
much we can add here as the price action became rangebound as traders are now
waiting for new catalysts before picking a direction. We need to zoom in to see
some more details.
S&P 500 TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we
have a minor downward trendline defining the current bearish momentum. We can
expect the sellers to continue to lean on the trendline to keep pushing into the
support. The buyers, on the other hand, will look for a break higher to target
a rally back into the resistance. The red lines define average daily range for today.
UPCOMING CATALYSTS
Today we get the latest US Jobless Claims figures
This article was written by Giuseppe Dellamotta at investinglive.com.
