After the strong rally triggered by Trump’s pause in the reciprocal tariffs, the S&P 500 hasn’t done much as the price just consolidated below a key resistance. The market has been waiting for more information on the negotiations front but as of now we haven’t got any, on the contrary, a couple of disappointing headlines hit the risk sentiment.
I think the market is eagerly waiting for the first trade deals to be announced to get a sense of what could come next and move based on those expectations.
The key number, in my opinion, is 10%. That’s what Fed’s Waller is looking at (and I guess everyone else at the Fed). 10% on average would be “good news” for the market, while higher tariffs would likely be taken as a disappointment and therefore “bad news”.
If you take a look at the price chart, we can see that the market is “on the brink between glory and disaster” and that will likely be decided by the first trade deals (unless things escalate or de-escalate meaningfully in some other way).
On the weekly chart above, we can see that the S&P 500 bounced almost perfectly from the key support around the 4805 level where we had a long term trendline and the 2022 high. If that support breaks, we could see much more pain in the market and a recession would be guaranteed.
On the daily chart, we can see that the strong rally triggered by the pause, stalled right at the key resistance around the 5510 level. That’s where the sellers stepped in with a defined risk above the level to position for another drop into the 4805 support. The buyers will need to break above that resistance to start gaining more conviction and a break above the downward trendline will likely confirm the resumption of the bullish trend.
On the 4 hour chart, we have two key near-term support levels to watch out for. The first one is at the 5300 level and the second one around the 5150 level. Dip-buyers will likely scale in around those levels but a break below the 5150 level would open the door for a fall towards the 4805 support
