S&P 500 Technical Analysis: Is Santa Claus coming to town?

KEY POINTS:

• US CPI surprises to the downside, potentially opening the door for an earlier than expected rate cut
• US Jobless Claims disagree with NFP report. We’ll get a clearer picture next month.
• Key technical levels are limiting the upside. The S&P 500 strengthened following the CPI release but eventually
  gave back some of the gains as the bullish momentum faded.

  The main takeaway is that
  the recent data shows gradual cooling in the labour market, with inflation
  undershooting Fed’s forecasts. Fed Chair Powell made it pretty clear in his
  last press conference that they are more focused on the labour market weakness,
  and they can tolerate some higher inflation given the transitory expectations.

  This suggests that we could
  see another rate cut sooner than expected, especially if the recent data gets
  validated next month. The market should start to move into that direction with new
  all-time highs likely being in the cards.

  S&P 500
  TECHNICAL ANALYSIS – DAILY TIMEFRAME

  On
  the daily chart, we can see that
  the S&P 500 probed below the key support zone around the 6800 level but
  eventually bounced back strongly. The buyers
  piled in as soon as the price rose back above the 6800 level with a defined
  risk below it to target new all-time highs. The sellers will need the price to
  break below the support to open the door for a bigger correction into the
  October lows.

  S&P 500
  TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

  

  On
  the 4 hour chart, we can see that
  we have a downward trendline defining the recent pullback into the 6800
  support. The price got rejected yesterday but it’s now coming back to retest
  the trendline. The sellers will likely continue to lean on the trendline to
  keep targeting a break below the 6800 support, while the buyers will look for a
  break higher to increase the bullish bets into a new all-time high.

  S&P 500
  TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

  On the 1 hour chart, we can
  see that we have a minor resistance around the 6885 level. In case we break
  above the trendline, the resistance will likely be the last level of defence
  for the sellers as a break above it should open the door for new all-time
  highs

  S&P 500 Technical Analysis: Is Santa Claus coming to town?