S&P 500 Technical Analysis

Yesterday,
the S&P 500 opened lower and finished the day negative following another
hot US CPI report.
This has pushed rate cuts expectations further out with the market now pricing
in less rate cuts than the Fed’s dot plot. The Treasury yields skyrocketed
across the board putting some pressure on the stock market. Now the market
might even think that the economy is still doing great, and the Fed is not
going to hike anyway, but there are now good reasons to see a bigger correction
to the downside, so the bulls should be extra careful.

S&P 500 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the S&P 500
has
been diverging with
the MACD for a
long time. This is generally a sign of weakening momentum often followed by
pullbacks or reversals. In this case, it led to pullbacks into the red 21 moving average and
the trendline where
the dip-buyers kept on stepping in to position for the rallies into new highs. The
recent breakout and consolidation though could be a bad omen for the buyers as
it opened the door for a possible reversal, which could have been confirmed by
the US CPI report yesterday as the price fell back below the moving average.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the
price has been bouncing around the 5180 support and
fell back below it yesterday following the CPI release. The sellers should step
in here with a defined risk above the 5180 zone to position for a drop into the
5100 level targeting a break below it. The buyers, on the other hand, will want
to see the price rallying back above the 5180 zone to invalidate the bearish
setup and position for a rally into new highs.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action around the 5180 zone. If the price falls into
the 5100 level, the buyers should step in with a defined risk below the level
to position for a rally into new highs. The sellers, on the other hand, will
keep increasing their bearish bets at every break lower.

Upcoming Events

Today we get the US PPI report and the latest US
Jobless Claims figures. Tomorrow, we conclude the week with the University of
Michigan Consumer Sentiment survey.

This article was written by FL Contributors at www.forexlive.com.