Big Tech Earnings and FOMC to Dominate a Busy Week

S&P 500, Nasdaq Analysis

The S&P 500 is preparing to test the long-term resistance on the earnings of big tech companies

The S&P 500 continues its impressive bullish trend, and is trading largely within the ascending channel. In recent weeks, prices accelerated within the broader uptrend, testing the upper bound of the channel again before pulling back at the end of last week. Once again, this area has come into focus – the confluence of 4550 and the 78.6% Fibonacci retracement of 2022 (4589). In fact, this area is now emerging as support as prices look poised for another test of channel resistance around 4600/4610 as the Weekly RSI moves into the overbought territory.

S&P 500 Weekly Chart (E-Mini Futures)

Source: TradingView, prepared by Richard Snow

On the weekly chart, a re-acceleration of the bullish trend can be seen despite a shallow pullback resulting from below-than-stellar Tesla and Netflix earnings. 4550 proved as immediate support, with 4609 placing bars for the bullish continuation.

S&P 500 Daily Chart (E-Mini Futures)

Source: TradingView, prepared by Richard Snow

Economic data/events can line up to push the NASDAQ higher

This week is likely to provide a tailwind for stocks if economic data appears in line with the broad consensus. A softer core CPI, better-than-expected earnings per share for Microsoft, Tesla and Meta and slightly weaker US GDP data could all work together to send stock valuations higher. The main risk, however, is a strong hawkish message from the Fed on Wednesday. The average Fed dot chart rates are 5.6% which suggests a final rate hike after July can be counted on to keep the markets on their toes.

The Nasdaq is trading in a similar fashion to the S&P 500, testing channel resistance before cooling off at the end of last week. The 78.6% Fibonacci retracement of the 2022 sell-off (15,420) presents itself as immediate support followed closely by 15,260. The RSI has yet to recover from the overbought area and doesn’t seem to show any tendency to do so either.

Nasdaq (E-Mini Futures) weekly chart

Source: TradingView, prepared by Richard Snow

Honorable mentions in this week’s data table include US personal consumption expenditures and second quarter GDP data from the US.

Customize and filter live economic data via DailyFX Economic calendar

– Posted by Richard Snow for DailyFX.com

Connect with Richard and follow him on Twitter: @employee