S&P 500 Technical Analysis – Rotation weighs on the market

Fundamental
Overview

Last Friday, Fed Chair
Powell delivered a more dovish than expected speech at the Jackson Hole Symposium as he
basically kept the door open for a 50 bps cut at the September meeting. The
line saying that they will do everything they can to support a strong labour
market was key.

Despite this, the S&P 500 failed to rally sustainably. The culprit
could be related to something that we’ve already seen in the first week of July.
In fact, the Russell 2000 extended the gains into new highs outperforming the
major indexes, which suggests that the lack of follow through from the S&P
500 could be related to rotation.

S&P 500
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the S&P 500 broke through the 5600 level and consolidated right
above it. The buyers remain in control and will certainly target a new all-time
high. The 5600 level is now a strong support
zone and the sellers will need the price to fall below it to regain some
control and position for a drop back into the 5200 level.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we had a quick drop into the 5600 support last Thursday following the
Flash US PMIs where the Manufacturing PMI fell further into contraction and
might have triggered some profit-taking.

The dip-buyers piled in
around the support to position for a rally into a new all-time high. If we were
to get a deeper pullback, the buyers will likely lean on the trendline
around the 5550 level, while the sellers will look for a break below it to
increase the bearish bets into new lows.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a resistance zone around the 5660 level where the price got rejected
from several times in the past days. The buyers will want to see the price
breaking higher to increase the bullish bets into a new all-time high, while
the sellers will likely lean on it to position for a drop back into the 5600
support. The red lines define the average daily range for today.

Upcoming
Catalysts

Tomorrow we have the US Consumer Confidence report. On Thursday, we get the
latest US Jobless Claims figures. On Friday, we conclude with the US PCE
report.

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