Yesterday, the Fed left interest rates unchanged as
expected with basically no change to the policy statement. Fed Chair Powell
repeated once again that they are “proceeding carefully” as the full effects of
the policy tightening have yet to be felt.
There were some expectations for him to hint or
signal something for the December meeting given that the September Dot Plot
showed another rate hike by the end of the year, but Powell instead
said that they “have not made any decisions on future meetings” sparking a
rally in the S&P 500.
On the data front, yesterday the US Job Openings beat
expectations, but the ISM Manufacturing PMI missed
by a big margin. The market might be taking this as good news for a relief
rally in the short term, but the bulls may want to be careful going forward.
S&P 500 Technical
Analysis – Daily Timeframe
S&P 500 Daily
On the daily chart, we can see that the S&P 500
bounced around the 4100 level and rallied back above the 4194 resistance. The
buyers continued to gain confidence at every breakout, increasing the bullish
bets into the key trendline and the
61.8% Fibonacci retracement level
around the 4300 level. That’s where the sellers are likely to step in more
aggressively to position for another selloff into new lows.
S&P 500 Technical
Analysis – 4 hour Timeframe
S&P 500 4 hour
On the 4 hour chart, we can see that we had a divergence with the
MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we are seeing a pullback into the trendline where the
sellers will have a much better risk to reward setup.
S&P 500 Technical
Analysis – 1 hour Timeframe
S&P 500 1 hour
On the 1 hour chart, we can see that we
had a divergence on this timeframe as well signalling a pullback into the minor
trendline. Since the price managed to break above the trendline, a reversal was
confirmed, and more buyers piled in to extend the rally into the 4194
resistance. The price broke above the resistance as well, giving the buyers
another reason to increase the bullish bets.
If we get a pullback, the buyers are
likely to lean on the 4194 support where we can also find the 38.2% Fibonacci
retracement level and the red 21 moving average for confluence. The
sellers, on the other hand, will want to see the price breaking below the
support to position for a drop into new lows.
Upcoming Events
Today, we have only the US Jobless Claims data,
which will be important for the market given the recent weakness in Continuing
Claims. Tomorrow, we conclude the week with the US NFP report and the ISM
Services PMI.
See the video below
