This week has been eventful for S&P500 Futures (CME: ES) traders, with the index futures hitting a fresh all-time high.
Markets responded positively to a slight dip in April’s inflation compared to March, pushing the index futures up by 1.40% for the week so far. This gain positions the S&P500 Futures in positive territory for a fourth consecutive week. The year-on-year inflation rate settled at 3.4%, and core inflation slowed to its lowest pace in three years, fuelling hopes for interest-rate cuts this year.
Market sentiment reflects a 67% chance of a quarter-point rate cut by the Federal Reserve in September, with some speculating on a possible rate cut as early as July, currently priced in at 29.2%, slightly higher than last week’s expectations. Despite the overall positive trend, momentum faltered with a dip in Thursday’s session, as ten of eleven S&P sectors finished lower. Consumer discretionary, materials, and industrials led the decline, indicating sector-specific pressures. This dynamic interplay of economic indicators and market expectations leaves investors eager to see how these factors will shape the future trajectory of S&P500 Futures.
Technical
The S&P500 Futures have been experiencing an uptrend, supported by technical indicators such as trading above the 100-day moving average within an ascending channel pattern. After finding support at the channel’s lower boundary around the 5216.75 level, the index futures rallied to achieve new highs.
However, the recent surge led to overbought RSI conditions, prompting a downturn at the 5349.00 resistance level. Currently, the index futures have retraced towards the 23.60% Fibonacci Retracement level, indicating a temporary pullback.
Market sentiment suggests that if downside pressures persist, the 50% Fibonacci level could attract interest as a potential support level. Conversely, a resurgence in upside momentum could lead to a retest of the 5349.00 resistance level. This dynamic interplay of technical analysis and market sentiment underscores the ongoing tug-of-war between buyers and sellers in the S&P500 Futures market, leaving traders vigilant for signs of the next significant move.
Summary
Despite sector dips, the S&P500 Futures soared to record highs amid positive market sentiment fueled by hopes for interest-rate cuts. Technical levels indicate an uptrend, with key resistance at 5349.00 and potential support at the 50% Fibonacci level. Traders remain watchful for market dynamics shaping future movements.
Sources: U.S. Bureau of Labor Statistics, CME, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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