January 31, 2025 at 09:59AM
Fundamental
Overview
The S&P 500 continues
to maintain a positive outlook although it came under some pressure recently as
the DeepSeek news weighed on overvalued AI stocks.
The market has been making
new highs ever since the last US inflation data as it marked the top in the
repricing of rate cuts expectations and inflation fears.
The Fed on Wednesday kept interest
rates unchanged as widely expected and Fed Chair Powell maintained a neutral
stance as they are waiting for more inflation progress and more clarity on
Trump’s policies before cutting again.
The market is now back in
expecting two rate cuts by the end of the year with the first one seen in June.
The risks ahead lie around inflation as the market will want to see more
progress to avoid some tightening in financial conditions.
There are also risks to
growth, especially if Trump’s tariffs lead to trade wars. Right now, it seems
like he just threatens countries with tariffs to get better deals, so the market
generally fades the news.
S&P 500
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that the S&P 500 erased almost all the gains from the benign US
inflation data as the DeepSeek news weighed on tech stocks. The dip-buyers didn’t
wait for long, and we are now nearing the all-time highs again.
The buyers will
want to see the price breaking higher to increase the bullish bets into new
highs, while the sellers will likely step in with a defined risk above the all-time
high to position for a drop back into the 5855 level next.
S&P 500 Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we broke above the recent high at 6112 with the buyers piling in with
a defined risk below the level to extend the rally into the all-time high. The
sellers, on the other hand, will want to see the price falling back below the
6112 level to position for a drop into the 6042 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 likely pile in around these levels to
push into a new all-time high, while the sellers will look for a drop below the
6112 level to target a pullback into the trendline.
The red lines define the average daily range for today.
Upcoming
Catalysts
Today we conclude the week with the US PCE and the US
Employment Cost Index.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
