The S&P 500 remains resilient due to the lack of bearish influences. Recent positive job data with lower wage growth is favourable for the market.
In the near term, risks include potential rate hikes, but this requires a high CPI report. The Federal Reserve’s current stance suggests the market will likely resume its upward trend following any setbacks.
Main Challenges and Market Indicators
Two main challenges loom: tariff negotiations and the upcoming US CPI data. Trade deals are expected to be finalised, with a deadline of August 1st. The CPI figures will play a crucial role in maintaining the current trend, with lower inflation numbers preferred.
Technical analysis reveals that the S&P 500 continually reaches new all-time highs. Buyers have a favourable setup near the previous all-time high, while sellers may focus on a drop to 6,000. The 4-hour chart identifies an upward trendline, presenting buying opportunities for potential new highs, while sellers eye a decline to the 5,800 level.
On the 1-hour chart, a minor upward trendline supports bullish momentum. Buyers may push for new highs, while sellers target drops to 6,236 and further to 6,160. This week’s key events include tariff discussions and US Jobless Claims data.
What’s described above can be viewed through two lenses: one that maps a calm, steady climb on the index and another that picks out the emerging pockets of volatility — mostly noise, but sometimes not.
Market Expectations and Structural Analysis
The data showing healthy job growth, with wage increases moderating, keeps a steady hand on the market. Inflation pressure dipping, without job losses, hints at a smoother glide path for rates. Powell’s stance, with no rush to tighten policy, implies that movements down are likely to be brief and offers room for recovery. Any downside doesn’t yet suggest a structural breakdown but rather the kind of breathing space buyers tend to welcome.
However, the mention of upcoming CPI adds a clear checkpoint. Markets are leaning on expectations — if the data veers sharply upward on inflation, the calculus changes. Rate worries return quickly, and that would invite some pricing reshuffling. The tariff negotiations tossed in suggest another potential swing point. Should no resolution come before the August deadline, the friction will find its way into equity pricing — almost immediately. Treasuries would likely firm up, and risk sensitivity would tick higher.
As for levels, the former high serves more than a symbolic function. That’s where heavy positions wait to be reloaded. Short-term buyers have had support along precise zones laid out by the minor trendlines, with momentum building neatly within those patterns. The 4-hour structure gives an orderly slope — clean bounces from support with increasing volume. It’s a textbook path towards another high, assuming no sharp economic surprises midweek.
We’ve been using the 5,800 level as the guidepost below. If prices fall through that with speed, especially during periods of low liquidity, that may trigger stops. Until then, pullbacks are being absorbed quickly. Sellers, to gain traction, will need to force moves through overlapping technical zones, which have been holding.
On the 1-hour view, there’s a weaker, though still relevant, line of support which may encounter pressure if options flows hedging against CPI come through. Renewed selling won’t require a collapse — a shallow fade off recent highs into the 6,236 and 6,160 regions would do the job of cooling positioning. Bearish flows have remained half-hearted, though. That can change with a miss in the Jobless Claims prints.
Heading into the remainder of the week, attention isn’t scattered. It’s aimed, fairly narrowly, at those two upcoming catalysts. The reaction to those — the tone of trade headlines and the inflation number — is unlikely to fade quickly after they drop. Read the tape around those events carefully. Act on the number — not the headline — and don’t ignore volume during those early reactions. We’ve seen plenty of misdirection in the past, particularly around CPI revisions.
Stay alert to changes in volatility metrics, particularly in pre-market futures and implied skew. Those, more than news flow itself, will show where blindspots might be forming.
