S&P 500 Technical Analysis – The Fed maintains the status quo

Fundamental Overview

The FOMC decision didn’t provide anything new. In fact, the Fed delivered on expectations with no surprises whatsoever. The central bank kept rates steady, reduced the QT pace, revised growth lower and inflation higher, and kept the dot plot mostly unchanged.

Fed Chair Powell acknowledged the current uncertainty around Trump’s policies and the inflation outlook but confirmed that the economy remains healthy, and the Fed is in a good position to wait for more clarity.

The only noteworthy comment was the dismissal of the rise in the long-term inflation expectations in the University of Michigan Consumer Sentiment survey as he labelled it as an outlier given that other metrics show long term expectations stable or even slightly lower.

Today, we get the US Jobless Claims figures which continue to show a stable labour market but it’s worth to keep an eye on them for early signs of weakness. The next key event is scheduled for Monday when we get the US Flash PMIs which coupled with the UMich inflation expectations triggered the growth scare last month.

S&P 500 Technical Analysis – Daily Timeframe

On the daily chart, we can see that the S&P 500 broke above the key 5720 level recently as the bounce continues to gather momentum. The buyers will likely have more conviction to step in with a defined risk below the key level, while the sellers will want to see the price falling back below the key level to pile in for new lows.

S&P 500 Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price broke above the downward trendline that was defining the bearish momentum. We now have an upward trendline defining the bullish momentum. If we get a pullback into the trendline, we can expect the buyers to lean on it with a defined risk below the trendline to position for a rally into new highs. The sellers, on the other hand, will look for a break lower to gain even more conviction and pile in for new lows.

S&P 500 Technical Analysis – 1 hour Timeframe

On the 1 hour chart, there’s not much else we can add here as the buyers will look for a bounce around the trendline, while the sellers will look for a break lower. On an intraday basis, if the momentum holds, a break above yesterday’s high might see more buyers piling in. The red lines define the average daily range for today.

Upcoming Catalysts

Today we get the latest US Jobless Claims figures.