S&P 500 Talking Points:
- US equities came into last week in full panic mode, and sellers continued to push on Tuesday and Wednesday.
- Bulls took control and Thursday and drove right back to resistance in the 5350 zone, driving a breakout on Friday that has so far held through the Sunday night open.
- I’ll be looking into these setups in the Tuesday webinar and you’re welcome to join, click here for registration information.
It’s been a change-of-pace for US equities over the past week as panic has pushed back to behind the scenes. Fresh lows were being set this time a week ago to go along with a deepened sell-off in the USD/JPY pair. And the turn was far from automatic, as bounces on Tuesday and Wednesday were faded aggressively.
But – as highlighted in these pieces those sell-offs were showing a diminishing quality as a series of higher-lows was building. On Thursday, bulls took control to drive back to the 5350 resistance zone, and then on Friday they pushed ahead to set a fresh near-term high.
For this week, inflation takes center-stage with the release of PPI on Tuesday and CPI on Wednesday. Paradoxically, this may be a backdrop where significantly lower readings of inflation bring a bearish drive for equities as that would be sign of a slowing US economy which could further compel a rally into Treasuries. And if rates are quickly falling there’s an opportunity cost for chasing stocks, especially after a sizable bounce late last week.
For Monday however, bulls retain control after the late-week swing and it’s the 5432 level that sticks out as important. This was support on two occasions before sellers drove the breakdown and as prices work back-up, that’s a big level of consideration. Before that comes into play, the 5,400 level presents resistance potential; as does the 5,500 level of prior support.
Support structure is in-place given last week’s two-way price action. The 5342-5357 zone is of particular interest given how many cases of resistance showed and 5328 is just below that, which helped to set the Friday low. Below that, 5300-5310 is of importance. Below that, there’s prior resistance/support swings at 5279, 5264 and then 5236 before key support at 5200 comes back into play.
Resistance:
R1: 5400
R2: 5432.50
R3: 5500
Support:
S1: 5342-5357
S2: 5300-5310.50
S3: 5264-5279.50
S4: 5197.50
S&P 500 Futures Hourly Price Chart
Chart prepared by James Stanley; data derived from Tradingview
--- written by James Stanley, Senior Strategist
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