The S&P 500 Index Futures (CME: ES) have been under pressure on Tuesday after declining over 0.46%, weighed down by rising Treasury yields and cautious investor sentiment ahead of key data releases and bank earnings. December retail sales, anticipated to show a slight dip, will be scrutinized as a critical barometer of consumer spending and potential recessionary whispers. Meanwhile, earnings reports from banking giants like Goldman Sachs and Morgan Stanley will offer insights into loan delinquencies and the overall health of consumer finance.
Mixed signals dominate the market landscape. Tech stocks remain resilient, with the Nasdaq’s recent gains reflecting investor optimism. However, the muted producer price index and the Federal Reserve’s ambiguous stance on future rate cuts inject a note of uncertainty. Additionally, geopolitical tensions in the Middle East add a layer of risk aversion.
Technical
The S&P 500 is currently locked in a tug-of-war between bulls and bears at 4,788.75, trading lower after breaking below both the 20-SMA and 100-SMA. Price action is currently trading below the 20-SMA (green line) and 100-SMA (orange line) but slightly above the 50-SMA (blue line). However, the upward-sloping 20-SMA recently broke above both the 50-SMA and 100-SMA, indicating a potential bullish momentum, while the downward-sloping RSI (40.51) hints at bearish undercurrents.
Short-term trading opportunities could exist towards the 4,804.00 resistance level should the price action break above the 100-SMA. A break above the initial resistance would bring the 4,823.00 and 4,836.25 resistance levels into play.
However, a break below the 50-SMA could confirm the short-term bearish momentum and would offer short-term trading opportunities towards the 4,775.25 support level lower. A break below the initial support would bring the 4,758.50 support level into play in the short term.
Summary
The S&P 500 presents a delicate balancing act between optimism and caution as investor sentiment hangs in the balance, torn between potential bullish catalysts like Fed rate cuts and resilient tech sectors and bearish signals like tepid retail sales and mixed bank earnings. The upcoming data and earnings reports will be crucial in tipping the scales and determining the market’s trajectory in the near term.
Even though technical indicators provide mixed signals, a break below the 50-SMA could confirm bearish momentum and offer opportunities towards the 4,775.25 support level, with further downside potential at 4,758.50. At the same time, a break above the 100-SMA and the 4,804.00 resistance level could confirm the upward trend.
Sources: TradingView, Trading Economics, Reuters, Dow Jones Newswire.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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