The S&P500 Futures (CME: ES), a key benchmark for the broader stock market, reached a historic milestone in Thursday’s trading session, hitting a new all-time high.
This remarkable surge was propelled by a wave of optimism following the Federal Reserve’s recent interest rate decision. Despite maintaining its key rates unchanged, the Fed hinted at the potential for three rate cuts this year, as indicated by the Fed Dot Plot. This decision, marking the fifth consecutive meeting without a rate adjustment, ignited market enthusiasm and drove significant momentum.
Market sentiment has notably shifted, with a 74% chance now priced in for a rate cut in June, compared to 58% just a week prior, underscoring growing expectations of monetary policy easing. Against this backdrop, the S&P500 Futures have soared by an impressive 2.39% week-to-date, with notable gains observed across nine out of the 11 S&P sectors in the past trading session, particularly in industrials, financials, and energy. This buoyant market outlook prompts a compelling question: will the S&P500 Futures sustain their upward trajectory, continuing to break through to new highs in the sessions ahead?
Technical
The S&P500 Futures have exhibited compelling price action, characterized by a pronounced uptrend within an ascending channel pattern and comfortably positioned above the 100-day moving average.
Notably, after a minor dip, the market found solid support at the 5167.75 level, sparking a surge in buying activity that propelled the index futures to achieve a new all-time high at 5322.75. However, as the market reached this pinnacle, overbought conditions signalled by the RSI prompted increased downside volumes, establishing the 5322.75 level as a formidable resistance.
Presently, the potential for a sustained retracement looms, with focus potentially turning towards the 23.60% Fibonacci Retracement level should downside momentum intensify. Conversely, a resurgence in upside momentum could pave the way for a retest of the 5322.75 resistance level.
Summary
The S&P500 Futures showcase robust strength, hitting new highs driven by optimistic market sentiment amid expected rate cuts. Despite potential resistance at 5322.75, sustained upside momentum could push the index futures to retest this level. In contrast, the 23.60% Fibonacci Retracement level serves as a possible point of interest to the downside in case of intensified selling pressures.
Sources: Reuters, Trading Economics, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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