S&P 500 Technical Analysis – We have two main risks ahead

Fundamental
Overview

The S&P 500 continues
to be supported given the lack of bearish drivers. Last Thursday’s NFP looked
like it could offer a bigger pullback on a hawkish repricing in interest rate
expectations but the positive data came with lower wage growth, which is great
for the stock market.

In the short-term, the only
risk I can see is further hawkish repricing in interest rates expectations, but
we will likely need a hot CPI for that. That should provide a deeper pullback. But
given that the Fed’s reaction function remains to either wait more or cut, the
market should eventually get back to its upward trend.

We now have two main risks
ahead for the bulls: tariffs noise and US CPI. The White House is expected to
sign trade deals and send letters with the new tariff rates to countries that
have not reached a deal yet. The good news is that we have once again a
deadline, which is August 1^st. Therefore, it looks like the usual negotiations
tactic to speed up the process and accept the US requests.

On the other hand, we have
the US CPI coming up next week. To keep the trend going, we would likely need
soft inflation figures as a hot report should trigger a deeper pullback.

S&P 500
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the S&P 500 continued to print new all-time highs pretty much everyday
once the price broke above the February highs. From a risk management
perspective, the buyers will have a better risk to reward setup around the
previous all-time high at 6,160-ish level to position for the continuation of
the uptrend. The sellers, on the other hand, will want to see the price breaking
lower to pile in for a drop into the 6,000 level next.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have an upward trendline defining the uptrend. If we were to
get a pullback all the way into the trendline, we can expect the dip-buyers to
lean on it to position for a rally into new all-time highs with a better risk
to reward setup. The sellers, on the other hand, will look for a break lower to
increase the bearish bets into the 5,800 level next.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor upward trendline defining the bullish momentum on this
timeframe. The buyers will likely continue to lean on the trendline to keep
pushing into new highs, while the sellers will look for a break lower to target
a deeper pullback into the 6,236 level first and, upon a further break lower,
into the 6,160 price area.

Upcoming
Catalysts

The only notable
events this week are Trump’s letters on tariffs and trade deals, and
the US Jobless Claims figures on Thursday.