S&P 500 Begins Q2 on a Week Foot

The S&P 500 Index (CME: ES) kicked off Q2 with a pullback, its first weekly decline in three weeks. This coincided with concerns about inflation and the Federal Reserve’s monetary policy. Stronger-than-expected jobs data initially pressured the market as it challenged the narrative of imminent rate cuts. However, comments from some Fed officials suggesting a dovish stance later this year helped temper the selloff.  

The upcoming inflation data (CPI and PPI) this week will be crucial for the market’s direction. A reading above expectations could reignite fears of sustained inflation and push back expectations of rate cuts, potentially leading to further market weakness. Conversely, a cooler inflation report could revive hopes of a dovish Fed and reignite the risk-on rally. 

Technical Analysis (4-Hour Chart) 

The S&P 500 is currently attempting to build on Friday’s gains. The price action is hovering around the 20-SMA (green line), indicating a short-term recovery attempt. However, the price remains below the 50-SMA (blue line) and 100-SMA (orange line), which recently underwent a bearish crossover, suggesting a longer-term downtrend. 

Therefore, a sustained push above the SMAs could offer short-term trading opportunities towards the all-time high of 5,333.50. A break above the all-time high, on high volume, could offer further trading opportunities towards the 23.60% Fibonacci extension level (5,375.25) and 38.20% Fibonacci extension level (5,401.00) higher.  

With the RSI (46.76) trading below the 50.00 price level, continued bearish momentum would boost the bears’ chances of testing the 5,194.75 price level. A successful break below the 5,194.75 price level, on significant volume, would bring the 5,123.75 and 5,058.25 price levels into play in the short term. 


The S&P 500 Index (CME: ES) enters the week with a cautious tone, aiming to recover from last week’s decline amidst anticipation of the upcoming inflation data and the perceived path of Fed policy. A break above the key SMAs and the all-time high, backed by strong volume, suggests a potential bullish continuation. Conversely, a decline below the 5,194.75 support level could trigger further downside.  

Sources: TradingView, Trading Economics, Simply Wall Street, MarketWatch. 

Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst 

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