The S&P500 Futures (CME: ES) have recently faced significant headwinds, experiencing three consecutive weeks of losses. Last week, the index futures plummeted by 3.17%, marking the sharpest weekly decline of the year.
This downward spiral was propelled by a confluence of factors: robust U.S. economic data, including notable retail sales growth and lower-than-expected jobless claims, coupled with hawkish remarks from Federal Reserve officials. These remarks solidified expectations of a delay in interest rate cuts, with markets now pricing in a potential cut in September, dampening investor sentiment.
Furthermore, escalating geopolitical tensions have heightened risk-off sentiment, driving investors towards safe-haven assets like the U.S. Dollar, Bonds, and Gold. As traders eagerly anticipate upcoming U.S. GDP data and the Fed-preferred PCE price index report, along with pivotal corporate earnings reports from industry giants such as Tesla, Meta Platforms, Microsoft, and Alphabet, the short-term trajectory of the index futures remains uncertain.
Technical
The price action of the S&P500 Futures has depicted a clear downtrend, trading below its 100-day moving average, confirming bearish sentiment. A descending channel pattern further reinforces this downward trajectory, with a resistance level materializing at 5095.25 as downward pressures intensified last week.
Amid oversold RSI conditions, a support level emerged at 4963.50, sparking a rebound. However, this rebound faced resistance at the 61.80% Fibonacci Retracement Golden Ratio level, acting as an intermediate resistance point.
Market sentiment suggests that the 4963.50 support level could attract further downside interest if the bearish trend persists. Conversely, a resurgence in upside momentum could lead to a retest of the Golden Ratio level.
Summary
In conclusion, the S&P500 Futures faced its deepest weekly loss of 2024, driven by robust U.S. economic data and hawkish Fed remarks. Technical analysis reveals a downtrend below the 100-day moving average, with key levels at 5095.25 resistance and 4963.50 support. Market sentiment remains cautious amid geopolitical tensions and upcoming economic data.
Sources: Reuters, Trading Economics, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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