FUNDAMENTAL
OVERVIEW
The S&P 500
erased some of its Thursday’s gains as the US NFP reporton Friday showed job growth in August almost tripling the consensus
estimate of 56K. This triggered a hawkish repricing in interest rates expectations,
with the odds for a September hike jumping back to roughly 58%.
This week is all about the US CPI data.
Unless, we get some surprising breakthrough in US-Iran relations, the price
action will likely remain mostly rangebound or a bit negative as traders at
some point might start hedging into the CPI release. Moreover, there’s still some room to erase the Waller-driven gains, so the sellers should remain in control into the CPI.
A soft or in-line CPI will likely give the
S&P 500 a boost as Fed’s Waller mentioned that he won’t consider a rate
hike unless we get a hot CPI.
Conversely, an upside surprise in core monthly inflation data will likely
trigger a selloff on further hawkish repricing.
S&P 500 TECHNICAL ANALYSIS – DAILY TIMEFRAME
On
the daily chart, we can see that
the S&P 500 eventually bounced around the
7,640 support and erased almost all the Warsh-driven losses. If we get another pullback
into the support, we can expect the buyers to step in with a defined risk below
the support to position for a rally into new record highs. The sellers, on the
other hand, will want to see the price breaking lower to pile in for a drop into
the bottom trendline around the 7,400 level.
S&P 500 TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On
the 4 hour chart, we can see the
price rejected the downward trendline as the hot NFP report pushed rate hike
odds back higher, with traders now waiting for the US CPI as the ultimate confirmation.
If we get a pullback into the trendline, we can expect the sellers to lean on it
with a defined risk above it to position for a drop into the 7,640 support. The
buyers, on the other hand, will want to see the price breaking higher to
increase the bullish bets into new record highs.
S&P 500 TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we
have a minor support zone around the 7,710 level where the bearish momentum waned
and the price consolidated. The sellers will want to see the price breaking
below the support extend the drop into the 7,640 support next. The red lines
define the average daily range for today.
UPCOMING CATALYSTS
On Thursday, we get the
US PPI report and the US Jobless Claims figures. On Friday, we conclude the
week with the US CPI report.
This article was written by Giuseppe Dellamotta at investinglive.com.