U.S. equities still seem to be struggling to find direction, as this stock index has been pacing back and forth inside its range for a while.
Will we see a breakout soon? And which direction might it go?
S&P 500 Index (SPX500) 1-hour Chart by TradingView
Market sentiment has been extra fickle these days! No wonder the S&P 500 index has been tossing and turning inside its range that’s been holding since the final weeks of December.
And why wouldn’t it?
Shifting views on the Fed’s policy bias may be to blame for this rangebound action, as the central bank previously signaled scope for three rate cuts this year but the minutes revealed that officials are inclined to keep interest rates “higher for longer.”
Then there’s last week’s U.S. inflation reports that kept investors on edge then ultimately gave mixed signals, too. Headline and core CPI beat estimates, triggering a selloff for risk assets, but PPI figures fell short and hinted of subdued price pressures down the line.
The stock index has found support around 4,700.00 that lines up with S1 (4,702.92) and resistance near the 4,800.00 major psychological mark.
A test of resistance is going on right now, and another bounce might drag the S&P 500 back down to nearby support zones, including the pivot point level (4,753.31) or the dynamic support zones at the moving averages.
The 100 SMA is still above the 200 SMA, though, so there’s a good chance these floors might hold. Stochastic is on middle ground, barely offering any strong directional clues at the moment.
I’m seeing higher lows in the past few days, suggesting that bulls may be gathering some energy to bust through the ceiling and go for a move to R1 (4,826.82) or even R2 (4,877.21).
Don’t forget to keep an eye out for top-tier market catalysts that could once again push sentiment around this week!