The S&P500 Index Futures (CME: ES) closed the Friday trading session 1.83% higher, buoyed by resilient corporate earnings and higher-than-anticipated jobs data figures from the US. The strong NFP data, which jumped by 253K compared to the anticipated 180K and the slight decline in the unemployment rate lowered the recessionary fears in the US and boosted the bullish sentiment towards the equities.
Apple’s stronger-than-expected quarterly performance also supported the index futures’ recovery from the four-week low. However, the index futures have opened the week tentatively as investor trade cautiously ahead of this week’s main event, the US inflation data. The CPI report on Wednesday could continue to drive the market sentiment, with hotter-than-anticipated CPI figures likely to negatively weigh on the futures, while the opposite might be true for the market.
Technical
The 4H chart shows that the index futures rallied on Friday after the reaction to the US jobs data helped the price action sustain a rejection of the 50% Fibonacci retracement level. The index futures are now trying to settle above the 23.60% Fibonacci retracement level. A sustained break above the 23.60% Fibonacci retracement level would boost the bulls’ attempt to push for the 4163.50 resistance level. A break above 4163.50 would bring the 4188.25 resistance level in bulls’ sight.
However, the failure to maintain a move above the 23.60% Fibonacci retracement level would entice the bears to drive the price lower, with the 50-day moving average (50-EMA) acting as immediate support to the price action. Failure of the 50-EMA to hold would bring the 4131.75 and 4105.25 support levels firmly in play.
Summary
The market sentiment will continue to drive the index futures in the short term, with the bets on a soft landing giving support to the futures. However, with the fears of a looming recession and a potential US banking crisis not entirely subdued, the possibility for significant downside remains rife.
Sources: TradingView, Reuters, MT Newswire.
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