Last week, the S&P 500 futures (CME: ES) wrapped up with a solid 1.63% increase, defying concerns voiced by Federal Reserve officials about the timeline of potential interest rate cuts. A standout catalyst behind this surge was Nvidia’s exceptional performance, igniting a wave of optimism across US equities. With yet another impressive earnings report, Nvidia has continued its remarkable ascent, driving its stock price up by a staggering 60% since the start of the year.
This remarkable growth has swelled the company’s market capitalization by $747 billion, solidifying its position alongside Meta, Microsoft, and Amazon, accounting for 60% of the S&P 500’s overall gains this year. While these four giants have largely dictated market sentiment, the upcoming week holds the potential for further shifts, particularly with the release of crucial US GDP and PCE data. These statistics have the power to reshape expectations surrounding the timing of the Federal Reserve’s first rate cut, injecting additional uncertainty into the market.
Technical
On the 4H chart, a breakout occurred from the prior rectangle range that was established between 4,957.00 and 5,061.00. However, resistance was met at the 161.8% Fibonacci extension near 5,120.25, where the retracement was initiated. Support at 5,092.50 could be crucial to gauge whether the retracement has concluded or will be prolonged in the upcoming session.
If this support does not hold, the pullback could be extended toward 5,061.00 at the resistance of the prior rectangle. This could be an inflexion point, as an additional leg lower could trigger a trend reversal toward 5,041.50, the Fibonacci midpoint, and 5,022.00, the 61.8% Fibonacci golden ratio. The 25-SMA (green line) and 50-SMA (blue line) could make it challenging for the sellers to continue the downward ascent, while the 100-SMA (orange line) at 5,013.64 could create an additional barrier if the price continues its descent.
However, if the price remains above the support level at 5,092.50, only one barrier remains at the 161.8% Fibonacci extension from the prior downtrend at 5,120.25. If this level clears, the future could continue forming new record highs as its impressive ascent continues.
Summary
Despite hawkish developments regarding the timeline for the first rate cut from the Federal Reserve, the S&P 500 maintained its impressive ascent, riding the sentiment from Nvidia’s earnings release. As we advance, support at 5,092.50 could be a pivotal level to determine how far the current pullback from the peak of the uptrend will extend.
Sources: Koyfin, Tradingview, Reuters
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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