Fundamental
Overview
The S&P 500 remains
under pressure as despite a softer US CPI and US PPI reports, the components that feed into the
Core PCE increased the Fed’s preferred inflation measure. In fact, the Core PCE
Y/Y is now projected at 2.7% vs. 2.6% prior, while the M/M measure is seen at
0.3% vs. 0.3% prior.
The main fear in the market
is that in case we get a slowdown, the Fed might not be fast enough in cutting
rates amid the inflation constraint and eventually worsen the economic pain.
Moreover, the uncertainty around Trump’s tariffs add to those expectations of a
slowdown in growth and potentially higher inflation in the short-term.
Today we have the
University of Michigan Consumer Sentiment report. As a reminder, the jump in
long-term inflation expectations to a new 30-year high in the prior report
weighed on the market, so that’s going to be in focus today.
S&P 500
Technical Analysis – Daily Timeframe
S&P 500 Daily
On the daily chart, we can
see that the S&P 500 broke below the key 5720 level and extended the drop
into the 5500 level. From a risk management perspective, the sellers will have
a better risk to reward setup around the 5720 level where they can step in with
a defined risk above the level to position for a drop into the 5400 level next.
The buyers, on the other hand, will want to see the price breaking above the
5720 level to regain some conviction and pile in for a rally back into the
all-time highs.
S&P 500 Technical
Analysis – 4 hour Timeframe
S&P 500 4 hour
On the 4 hour chart, we can
see that we have a downward trendline defining the bearish momentum. This
is where we can expect the sellers to step in with a defined risk above the
trendline to position for further downside. The buyers, on the other hand, will
look for a break higher to target the next trendline around the 5720 level.
S&P 500 Technical
Analysis – 1 hour Timeframe
S&P 500 1 hour
On the 1 hour chart, there’s
not much else we can add here as the sellers will look for a rejection from the
trendline, while the buyers will look for a break higher to target the next major
trendline. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we conclude the week with the
University of Michigan Consumer Sentiment report.
