Markets are bracing for key economic data, including U.S. Final GDP, Unemployment Claims, and the Core PCE Price Index, alongside Canada’s monthly GDP. These releases could shape short-term sentiment and Fed rate expectations.
The S&P 500 has rallied over 27% since April, supported by strong technical momentum. However, with resistance levels approaching and signs of weakening momentum, a short-term pullback is possible.
While easing geopolitical tensions have lifted sentiment, Fed Chair Powell’s warning about tariff-driven inflation and slowing home sales continue to weigh on investor confidence.
Since establishing a low of 4800.73 on April 7, the S&P 500 has rallied more than 27% from trough to peak, supported by a combination of technical and fundamental tailwinds. The initial breakout was triggered by a failure swing reversal pattern, where the intermediate low at 5100.90 held above the prior trough. This was followed by a decisive move above the previous peak at 5492.67, confirming a bullish continuation.
Price action also reclaimed both the 20- and 50-period Exponential Moving Averages (EMAs), reinforcing the trend strength. Notably, a bullish crossover occurred as the 20-period EMA moved above the 50-period EMA — a “Golden Cross” signal that further validated upward momentum.
Momentum indicators have remained constructive. The Momentum Oscillator continues to print above the 100 level, and the Relative Strength Index (RSI) is holding well above the 50 line, both indicative of sustained buying interest.
That said, emerging negative divergence between price and momentum indicators suggests underlying strength may be fading. This divergence introduces the risk of a short-term consolidation phase or corrective pullback, even as the broader trend remains intact.
Key Resistance Levels
Should the bulls maintain market control, traders may direct their attention toward the four potential resistance levels below:
6149.50: The initial resistance level is determined at 6149.50, reflecting the all-time high reached on February 19.
6180.99: The second resistance level is set at 6180.99, which mirrors the weekly resistance, R3, calculated using the standard Pivot Points methodology.
6355.22: The third resistance level is seen at 6355.22, which represents the 261.8% Fibonacci Extension drawn from 6070.71 to 5910.27.
6631.02: An additional price target has been established at 6631.02, which reflects the 423.6% Fibonacci Extension drawn from 6070.71 to 5910.27.
Key Support Levels
Should the sellers take market control, traders may consider the four potential support levels listed below:
5910.27: The initial support level is seen at 5910.27, corresponding to the low point from June 23.
5775.42: The second support level is estimated at 5775.42, representing the weekly support, S3, estimated using the standard Pivot Points methodology.
5492.67: The third support level is identified at 5492.67, reflecting the high point marked on April 10.
5300.98: An additional downside target is 5300.98, mirroring the trough marked on April 21.
Fundamentals
U.S. stocks reversed earlier gains Wednesday after Fed Chair Jerome Powell warned that President Trump’s tariffs could drive inflation in the coming months. While Powell acknowledged inflation remains “in a really good place,” he cautioned that tariff costs will likely be passed to consumers over time.
The S&P 500 slipped just over 0.1%, the Dow fell 0.4%, and the Nasdaq edged up 0.1%. The pullback followed Tuesday’s rally, which was fueled by Powell’s earlier comments suggesting the Fed could consider rate cuts “sooner rather than later.”
Investor sentiment improved this week on easing Middle East tensions following a U.S.-Iran ceasefire and reduced fears of oil supply disruption. The S&P 500 is up over 2% week-to-date. However, economic data showed a slowdown in new home sales, and concerns over potential policy missteps remain a drag on broader sentiment.
Conclusion
While the S&P 500 continues to exhibit strong upward momentum, upcoming economic releases and lingering inflation concerns may introduce near-term volatility. Traders should remain cautious as key resistance levels are tested and momentum indicators hint at a potential slowdown. With geopolitical risks easing but economic uncertainty persisting, the market’s next move will likely hinge on how incoming data shapes expectations for Fed policy and overall growth.
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