S&P 500: Range Expansion – Week Starting 8th May (Technical Analysis) (SP500)

It has been a risky week for the S&P 500 (SPY), and already the Might vary is bigger than April’s. There have been 4 decrease closes in a row into Friday’s open, however NFP saved the bulls. Cancel the recession. However then, would not this additionally cancel the anticipated pause and fee cuts? What would this imply for the S&P 500?

In an try and reply that, quite a lot of technical evaluation methods might be used to take a look at possible strikes for the S&P 500 within the week forward. The S&P 500 chart might be analyzed on month-to-month, weekly, and day by day timeframes. I’ll then present my very own conclusions and make a name for the week forward. My calls could not at all times be appropriate, however they are going to be based mostly on stable proof and made with out bias.

S&P 500 Month-to-month

A number of weeks in the past, I identified the tiny April vary and mentioned, “contraction ought to result in growth in Might.” That has already performed out, however a brand new excessive over the April excessive was rejected, then a marginal new low underneath the April low was additionally rejected. That leaves a impartial bias for now. Nonetheless, the coiling underneath 4195 resistance is bullish general.

Resistance is at 4195, adopted by 4325 on the excessive of August.

Assist is available in at 4048-49 and on the March low of 3808, with the 50MA a distant 3725.

There aren’t any exhaustion indicators in both course (utilizing Demark strategies). An upside exhaustion rely might be on bar 5 (of 9) in Might.

S&P 500 Weekly

A impartial bar with a decrease shut doesn’t give any sturdy bias for subsequent week. Nonetheless, dips are getting smaller and the chart does look to be consolidating for a break of 4195. If the value had been to rally and take a look at this space once more, it needs to be a real break-out this time. Nonetheless, in an identical vein, one other take a look at of the 4048-49 space would seemingly break this help.

If 4195 is cleared, the 61% Fib retrace of the 2022 bear market is at 4311, with the August excessive of 4325 simply above.

If 4048 breaks, 3960 is the subsequent first rate help.

There may be an upside (Demark) exhaustion rely underway and might be on bar 8 of a attainable 9 subsequent week.

S&P 500 Each day

This week’s reversal from 4048 was similar to the reversal from 4049 the week earlier than. It was accompanied by an identical sample in Regional Banks (KRE) following a capitulation backside on Thursday. This sector ought to get well over the approaching weeks, and improved danger sentiment needs to be a tailwind to the S&P 500.

The day by day chart nonetheless has an energetic head and shoulders with a goal of 4280. Given the general bullish bias, it needs to be reached this quarter.

The 50dma will rise to the 4048-49 space subsequent week, including help there. A break of this space ought to result in 3960.

No Demark exhaustion indicators are attainable subsequent week.

Occasions Subsequent Week

CPI on Wednesday and PPI on Thursday are the principle releases. Scorching inflation knowledge would seemingly weigh on the S&P 500 because it heightens the likelihood of additional fee hikes from the Fed, particularly after the better-than-expected employment knowledge this week.

However, weak readings might drive the S&P 500 greater. Maybe the bulls actually can get all the pieces they need: a robust financial system, falling inflation, a Fed pause, and cuts later this 12 months.

Name me skeptical, however I do not suppose this excellent state of affairs provides up over the longer-term. That mentioned, markets do not care what I believe and will ignore the flawed logic as they chase a rally greater. I’m reminded of the previous adage, ‘markets can stay irrational longer than you may stay solvent.’

Possible Strikes Subsequent Week

Subsequent week is successfully break up into two sections. Pre-CPI buying and selling on Monday and Tuesday needs to be slower, and a failure round 4160 might result in a dip again to 4090-96.

Put up-CPI is trickier to name, as this week’s motion was impartial. There’s a bias for extra growth this month, which implies this week’s vary shouldn’t be more likely to maintain. However which method?

After this week’s dip, the door is now open greater. With the general bullish bias in a number of timeframes, that is the possible transfer and so long as any early dip is delicate and doesn’t shut weak under 4090, it ought to arrange a take a look at and break of 4186-95 later within the week.

Nonetheless, I might not wish to see any sharp decline in direction of this week’s lows. Growth by 4048 would goal 3960.