Fundamental Overview
The S&P 500 continues to be supported given the lack of bearish drivers. Last Thursday’s NFP looked like it could offer a bigger pullback on a hawkish repricing in interest rate expectations but the positive data came with lower wage growth, which is great for the stock market.
In the short-term, the only risk I can see is further hawkish repricing in interest rates expectations, but we will likely need a hot CPI for that. That should provide a deeper 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 now have two main risks ahead for the bulls: tariffs noise and US CPI. The White House is expected to sign trade deals and send letters with the new tariff rates to countries that have not reached a deal yet. The good news is that we have once again a deadline, which is August 1st. Therefore, it looks like the usual negotiations tactic to speed up the process and accept the US requests.
On the other hand, we have the US CPI coming up next week. To keep the trend going, we would likely need soft inflation figures as a hot report should trigger a deeper pullback.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 continued to print new all-time highs pretty much everyday once the price broke above the February highs. 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 lower to target a deeper pullback into the 6,236 level first and, upon a further break lower, into the 6,160 price area.
Upcoming Catalysts
The only notable events this week are Trump’s letters on tariffs and trade deals, and the US Jobless Claims figures on Thursday.
This article was written by Giuseppe Dellamotta at www.forexlive.com. Read More Details
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