Yesterday’s US CPI report missed expectations across the board, with the unrounded numbers looking even better. This led the market to expect just one last move at the July FOMC meeting as the labor market remains tight and Fed members did not hint at another jump after the release of the CPI. Overall, the odds of a soft landing have increased, but there will come a time when the market will need to exercise caution and watch out for signs that economic growth is slowing too much.
S&P 500 Technical Analysis – Daily Timeline
On the daily chart, we can see that the red 21 moving average acted as dynamic support for the S&P 500 as buyers relied on the moving average to position themselves for a breakout. The target should now be level 4628 and after that the all-time high. If this breakout fails and the price quickly falls back below the 4494 level, that would be an ominous signal for a counterfeit, but at the moment it looks like only bad economic data could cause such an event.
S&P 500 Technical Analysis – 4 Hour Timeframe
On the 4 hour chart, we can see that the 4494 resistance coupled with the trendline drawn on the higher lows, has formed an ascending triangle. A break on either side usually leads to big moves afterwards as momentum builds and more buyers or sellers pile in. All other things being equal, we should see the S&P 500 rally to the 4628 level in the coming days and weeks.
S&P 500 Technical Analysis – One Hour Timeframe
On the 1-hour chart, we can see that we may have a mini ascending triangle with resistance standing at 4524. A break above this level should see more buyers pile in and extend the rally to the downside. 4628 level. Alternatively, if we do get a pullback, we should see the buyers relying on the 4494 level where we also have a trendline for confluence. Sellers, on the other hand, will want to see price break below the 4494 level and the trendline to confirm the fakeout and stack up to extend selling into the black trendline at 4440.
Events to come
Today we have US Unemployment Claims on the calendar and it is likely that we will see a pullback in case we see a big miss to expectations and a rally in case the data breaks. Tomorrow we will wrap up the week with the University of Michigan Consumer Sentiment Report.
See also the video below: