S&P 500 Technical Analysis – The stock market looks forward to Trump’s policies

Fundamental
Overview

The S&P 500 soared into
a new all-time high following Trump’s victory and the red sweep as the market
started to look forward to bullish drivers like tax cuts and deregulation.

One potential bearish
reason people are looking at is rising Treasury yields. That’s generally bearish
when the Fed is tightening though as the market looks forward to an economic
slowdown.

Right now, the Fed’s
reaction function is that a strong economy would warrant an earlier pause in
the easing cycle and not a tightening. That should still be supportive for the
stock market.

If the Fed’s reaction function
changes to a potential tightening, then that will likely see the stock market
correcting lower.

S&P 500
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the S&P 500 bounced from the key support
zone around the 5720 level and extended the rally into a new all-time high
following Trump’s victory. The only technical level of note now is the resistance
turned support around the 5918 level.

If we get a pullback, we
can expect the buyers to step in there to position for a rally into new highs,
while the sellers will look for a break lower to start targeting the 5830 level
next.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the support around the 5918 level on this timeframe where we
did get a bounce yesterday already. The momentum is strong but if we get a
bearish reaction to the Fed’s decision in the afternoon, the dip-buyers will
likely step in around that level to target new highs. The sellers, on the other
hand, will look for a break lower to target the 5830 level.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, there’s
not much we can add here although the price action here looks like the momentum
has slowed and we might get the pullback. The red lines define the average daily range for today

Upcoming
Catalysts

Today we have the US Jobless Claims and the FOMC Policy Decision. Tomorrow,
we conclude the week with the University of Michigan Consumer Sentiment report.

This article was written by Giuseppe Dellamotta at www.forexlive.com.