FUNDAMENTAL
OVERVIEW
The S&P 500 has been mostly rangebound in the past couple of weeks as
the US-Iran crisis brought back inflation and growth risks. This has also happened
amid overcrowded stock market positioning which has led to deleveraging across
the board.
The peak inflation narrative got stronger following this week’s soft US inflation
data which triggered a dovish repricing in interest rate expectations.
Nevertheless, the US-Iran risk in the background is weighing on sentiment dragging
the stock market lower and limiting the upside.
Moreover, the Fed is keeping a tightening bias, so that’s also a negative
driver as the central bank might be slower in reacting to worsening economic
data in case things deteriorate.
Looking ahead, traders will continue to focus on US-Iran headlines. As long
as the escalation continues, the market will likely remain under pressure. On
the other hand, a resolution and clear de-escalation should trigger a rebound
and potentially take us to new record highs.
S&P 500 TECHNICAL ANALYSIS – DAILY TIMEFRAME
On
the daily chart, we can see the S&P 500 rejected the resistance around the 7,630 level as the
sellers stepped in with a defined risk above it to position for a drop into the
7,200 level next. The buyers will want to see the price breaking above the
resistance to open the door for new highs.
S&P 500
TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On
the 4 hour chart, we have a
minor support zone around the 7,475 level. We can expect the buyers to step in around
the support with a defined risk below it to position for a rally back into the
resistance. The sellers, on the other hand, will want to see the price breaking
lower to increase the bearish bets into the 7,357 level next.
S&P 500 TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, there’s
not much we can add here as the buyers will have a better risk to reward setup
around the support, while the sellers will need to wait for a break to open the
door for new lows. 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, but the focus
remains on US-Iran headlines.
This article was written by Giuseppe Dellamotta at investinglive.com.