The S&P500 Futures (CME: ES) have surged in the current week, notably driven by a robust performance in the tech sector.
Trading 1.08% higher, the index futures appear set for a third consecutive positive week, buoyed by renewed confidence in tech stocks. This resurgence follows impressive results from the world’s largest chip maker, Taiwan Semiconductor Manufacturing Co (TSM).
Adding to the positive momentum is recent data indicating robust U.S. economic growth in the fourth quarter, with GDP expanding by a surprising 3.3%, exceeding forecasts of 2%. Notably, a significant 82% of S&P 500 companies reporting earnings have surpassed expectations, as per data from the London Stock Exchange Group, supporting the upside momentum. Furthermore, the flat reading of the PCE Price index at 2.6% offers an encouraging signal of inflation containment, potentially setting the stage for future rate cuts.
Technical
The S&P500 Futures exhibit a consolidation phase, encapsulated within the confines of a symmetrical triangle, setting the stage for potential volatility following the PCE Price Index report.
A momentary pause in the futures’ rally led to a dip, finding solid support at the 4873.50 level. The subsequent resurgence marked a peak, reaching an all-time high, only to be met with a retreat, leaving a notable resistance level at 4933.25 amid overbought RSI conditions.
The 61.80% Fibonacci Retracement Golden Ratio acted as a resilient intermediate support, thwarting sustained bearish pressures. The impending high volume breakout from the symmetrical triangle could herald an extended move, with the 4933.25 level becoming a potential focal point to the upside if a breakout materializes. Conversely, a retest of the 61.80% Golden Ratio looms if bearish pressures intensify, leading to a breakdown beneath the pattern.
Summary
The S&P500 Futures, propelled by strong tech sector performance, trade 1.08% higher and are poised for a third positive week. Robust economic data, led by a surprise 3.3% GDP growth, reinforces the uptrend, while positive earnings reports amplify optimism. The PCE Price index at 2.6% hints at inflation containment, possibly paving the way for future rate cuts. Technically, within a symmetrical triangle, the index faces a potential breakout, with the 4933.25 resistance as an upside focal point, contingent on sustained bullish momentum. Conversely, if bearish pressures escalate, a retest of the 61.80% Golden Ratio may occur.
Sources: U.S. Bureau of Economic Analysis, Wall Street Journal, London Stock Exchange Group, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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