S&P 500 continues to consolidate around all-time highs as US-Iran stalemate caps upside
FUNDAMENTAL OVERVIEW
The strong bullish momentum in the S&P 500 has waned recently as the prolonged US-Iran stalemate brought the attention back to underlying risks.
The constant push for a diplomatic resolution instead of another full-fledged war has been supporting the risk sentiment on expectations that a deal would be reached eventually. Nonetheless, the stalemate is causing oil prices to rise, and we are now back around triple digit levels.
That looks unlikely to change anytime soon as Trump has rejected Iran’s proposal to first open the Strait of Hormuz and then hold nuclear talks. Unfortunately, with stock prices at all-time highs Trump might not feel any pressure to concede.
Therefore, we might get stuck in a longer consolidation phase until the next major catalyst.
This might even set the stage for the next big selloff if the Strait of Hormuz remains closed for much longer and oil prices stay elevated, thus forcing the Fed to hike interest rates in the coming months.
Today, we have the FOMC policy decision and although the Fed is expected to keep everything unchanged amid the US-Iran uncertainty, there’s a risk of a more hawkish leaning due to resilient US data and a longer than expected US-Iran war. A neutral Fed shouldn’t bring much volatility, but a more hawkish one could trigger a bigger pullback.
S&P 500 TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that the momentum in the S&P 500 has waned recently amid the US-Iran stalemate. The previous all-time high around the 7,040 level might now act as support. If the price pulls back, we can expect the buyers to step in with a defined risk below the support to position for a rally into new all-time highs. The sellers, on the other hand, will look for a break lower to position for a drop into the 6,800 level next.
S&P 500 TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can see the consolidation has led to a break below the major upward trendline. This generally precedes a bigger pullback or a more extended consolidation before the next move. Again, from a risk management perspective, the buyers will have a better risk to reward setup around the support to keep pushing into new highs, while the sellers will wait for a break lower to open the door for new lows.
S&P 500 TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we have a minor resistance zone around the 7,190 level. The sellers will likely continue to step in around these levels with a defined risk above the resistance to position for a drop into the 7,040 support. The buyers, on the other hand, will look for a break to pile in for a rally into new record highs. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we have the FOMC policy decision. Tomorrow, we get the US Q1 GDP, the US Employment Cost Index and the latest US Jobless Claims figures. On Friday, we conclude the week with the US ISM Manufacturing PMI.
This article was written by Giuseppe Dellamotta at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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