S&P500 (SPX) Price Analysis – Aug 25, 2023

Daily Price Outlook

The global market sentiment is cautious due to upcoming speeches by leading central bankers at the Jackson Hole Symposium. Meanwhile, the lack of key data in Asia and mixed feelings about major economies also contribute to the sluggish mood. As in result, the S&P500 Futures showed a slight drop around 4,385, while US 10-year Treasury bond yields bounce back from the weekly low, up by 2 basis points to 4.25% from the previous day's fall.

Global Market Sentiment Affected by Strong US Dollar and Concerns Over China

Furthermore, the broad-based US dollar hit an 11-week high, while Gold Price saw mild losses but is heading for its first weekly gain in five weeks. In the Asia-Pacific region, stocks followed Wall Street's downward trend, reflecting concerns about China. This was fueled by upbeat US Durable Goods Orders for July and robust mid-tier economic data, which kept the Federal Reserve in a hawkish stance, dampening market sentiment.

Moroever, the fading optimism about US-China relations added to worries as China's Commerce Ministry expressed concerns about trade matters and called for increased credit to businesses. Meanwhile, the prospect of US arms sales to Taiwan raised geopolitical tension ahead of the US Commerce Secretary's visit to Beijing.

Thus, this news has contributed to a cautious global market sentiment, with a stronger US dollar, concerns about China, and hawkish signals from the Federal Reserve all weighing on investor confidence, leading to a generally negative mood in financial markets.

Global Economic Factors and Central Bank Leaders in Focus

Apart from this, Japan has reported lower inflation figures, which are significantly below the Bank of Japan's target, challenging positive expectations. Despite positive PMI data, optimism wanes due to strong US data and central banks favoring prolonged higher interest rates.

Looking ahead, market focus turns to central bank leaders, particularly European Central Bank President Christine Lagarde and Fed Chairman Jerome Powell, whose remarks are likely to have a significant impact on financial markets. Their statements will be closely watched for insights into future monetary policies and their effects on global economies.

S&P500 (SPX) - Technical analysis

Examining the technical aspects of the S&P 500, it's evident that the index has encountered resistance around the 4450 level, leading to a consolidative phase. Looking ahead, the potential scenario for the S&P 500 involves a potential decline towards the next support level at 4339. This level gains significance from its previous role as support on August 18th.

Should the S&P 500 breach the aforementioned support, the subsequent support level is anticipated at 4460, followed by a deeper support around 4170. On the flip side, if the S&P 500 manages to overcome the 4450 level, it would likely encounter immediate resistance around 4525, with further resistance extending beyond that, targeting the 4600 level.

Simultaneously, observing the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicators, both indicators are situated within the sell zone. This, in conjunction with the 50-day Exponential Moving Average (EMA) also residing in the sell zone, suggests that the bearish momentum remains robust.

Given this analysis, it's prudent to focus on the 4450 level. A break below this level could trigger selling positions, particularly considering the significant distance from this point. Additionally, keeping an eye on the psychological resistance level of 4400 is recommended, as breaching this level could potentially push the S&P 500 further downwards, targeting the 4339 level. Further developments should be closely monitored, especially if a break below 4339 occurs, as this could lead to a subsequent target of 4265.