S&P 500: Holding Short-term Trend Support Ahead of NFP
- Trend-line off 6/27 low held yesterday and into today
- Further upside looks likely following pullback/consolidation, but…
- A lot of resistance lies ahead as the S&P 500 approaches record highs again
The S&P 500 started out yesterday’s session on a positive note, but then later soured back towards the trend-line we pointed out on the hourly chart. As it turns out, this held almost to a ‘T’. In early hours futures trading, the S&P came close to touching off on trend support again before turning back higher. We will continue to use this trend-line as a guide until further notice. Even if it breaks the uptrend won’t come under serious fire, though, until a lower low is achieved below 2073.
The upward move off the 6/27 low is still in play with 2112, 2121, and 2127 in focus on further strength. The 2112 level was created during light 4th of July holiday trading, so one has to wonder how much of a wall of resistance it really is. Nevertheless, we won’t discount it and respect it as resistance until it proves otherwise.
The V-shaped recovery which initially unfolded in late June has taken a bit of a detour, with recent price action acting as a period of pullback/consolidation. It seems likely the market will try and make a push higher into the 2120s, at the least, on this next move, but from there it is likely to become tough sledding for longs as a barrier of resistance exists between the 2120s and the record highs at 2137. The initial thought is there will be push back by sellers. A solid rejection of overhead levels would be a welcomes sight on this end for initiating potentially good risk/reward shorts.
Today is ‘NFP day’: Analyst are expecting the US economy to have added 180k jobs in June, a strong rebound from the 38k jobs added in May. The unemployment rate is expected to edge higher to 4.8% from 4.7%. Of interest on the inflation front is average hourly earnings, which are anticipated to increase to 2.7% YoY from 2.5%.
No predictions on the outcome of NFP, but a strong deviation from expectations in either direction will shake markets up, so be prepared.
Check out our recently released Q3 forecasts for FX, equity indices, and commodities.
---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.