S&P 500 Technicals – Pushing for new highs before FOMC Minutes

S&P 500 Futures hit numerous support/resistance during yesterday’s trade. Price was consolidating just under 3rd Apr’s floor around 1,568 before early US trade broke the 1,563 interim support, only to find further support in the form of confluence of rising trendline and ceiling back on 4th April. Subsequently, price bounce higher on the back of stronger Feb US JOLTs Job Opening numbers and reach 2013 highs forged back on 3rd April. Despite trading just a hair higher than the previous high, price was unable to sustain the bullish pressure and felt back once again, finding confluence of the same rising trendline but with 9th April ceiling.

Hourly Chart

Now price is edging higher once more, with news of Troika recommending loan extensions to Portugal and Ireland. This is a shot in the arm for confidence that has been shaken greatly with German newspaper Spiegel saying that the Greek Government is planning to seize deposits, similar to what is done in Cyprus to raise emergency funds. Having Troika extending loans to existing aid recipients go a long way to affirm markets that this may not happen anytime soon.

Stochastic reading is encouraging, with an interim trough forming around the 50.0 mark. The past 2 troughs that occurred around this level coincidentally matches with rebounds from current rising trendline, similar to what is happening now. Though past trends are no guarantee of future occurrence, this place the stock index in good position to test current ceiling once more.

Daily Chart

Daily chart is also bullish with price looking to aim higher after hitting Channel bottom a few days ago. This also coincide with an interim trough form on Stochastic readings. Though readings are entering Overbought region, there is still space for readings to grow which does not impede a bullish break seeking to test Channel Top scenario. In any case, price has suffered 2 recent setbacks in the form of weaker ISM Manufacturing and NFP Print. Both are considered big market moving news but the negativity has all been swept aside. This underlines current bullishness in S&P 500 and the general US risk appetite at large. Looking at US treasury yields, it seems that the main driver for stock prices currently runs on Fed’s dovishness, which explains the observation of Stock and Treasury prices rising (yields falling) in tandem.

This makes today’s FOMC minutes all the more important. Even though the Fed is not expected to hint at “bolder monetary policy” like BOJ, stock prices could still ride higher should the minutes reflect hesitance from the Fed to curb QE3. Traders may wish to keep a lookout on price action and see if new highs are made on meeting minutes. Failure to do so in spite of continued dovish minutes may invalidate the bullish driver mention above, and potentially set price for reversals in the future.

More Links:
AUD/USD – Touches 1.05 for the First Time Since January
USD/SGD – 1.238 Resistance vs 1.237 Support
NZD/USD – Trading higher on China Imports Figures

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