S&P 500 broad market index futures fell
0.24% to 6,645 points on Monday, trading close to the recent all-time high of
6,673. Prices remain above the key 6,600 resistance, leaving open the potential
for an extreme rally toward 6,900–7,000 points. It is not yet clear whether the
resistance zone at 6,620–6,640 has been decisively broken or whether the index
is beginning to form a correction.
Institutional positioning points to caution.
The SPDR S&P 500 ETF Trust (SPY) recorded a $10.89 billion outflow last
week, the sixth in seven weeks. Once again, early inflows of $3.65 billion were
reversed into outflows by week’s end. Altogether, large investors have withdrawn
$31.2 billion from SPY over the last seven weeks, comparable to the $34.5
billion wave of withdrawals in March that was followed by a 14% market decline.
Although the current backdrop is more supportive—with the Federal Reserve (Fed)
cutting rates and U.S. President Donald Trump signalling progress in trade
talks with China—equities remain heavily overbought. The only visible near-term
downside catalyst is the risk of a government shutdown if Congress fails to
approve a temporary funding bill by October 1.
History shows shutdowns do not necessarily
drive prolonged losses. The last one, from December 2018 to January 2019,
coincided with a 15% selloff, but the bottom was reached on the day the
shutdown began, and the market recovered most losses before it ended. A short
pullback now would likely be seen as healthy, easing overbought conditions and
paving the way for a more sustainable rally into year-end.
This week, attention turns to speeches from
Federal Reserve officials and key macroeconomic data. Stephen Miran, recently
confirmed as a Trump-backed member of the FOMC, speaks Monday and is expected
to call for faster rate cuts, a supportive signal for equities. On Tuesday, Fed
Chair Jerome Powell will follow, and markets will watch closely whether he maintains
his hawkish rhetoric despite the Fed’s dovish pivot. PMI data released the same
day are expected to show cooling business activity in September, which could
undercut Powell’s stance. Later in the week, the final Q2 GDP estimate will be
published, but the focus will be on Friday’s Personal Consumption Expenditures
(PCE) price index, the Fed’s preferred inflation gauge.
Technically, the S&P 500 has already met
its primary target of 6,500–6,600 and is trading at 6,647, above the
6,620–6,640 resistance zone. A successful retest of this level would confirm
the breakout and activate the rally toward 6,900–7,000. Conversely, a breakdown
could spark a correction. Near-term support lies at 6,520–6,540, and a fall
below this range would be an early warning signal.
In commodities, Brent crude remains trapped in
a technically unfavourable phase expected to last through October. Prices are
trading at $66.76 per barrel within the $66.00–$68.00 support zone. Resistance
is located at $76.00–$78.00, while the next major support lies lower at
$56.00–$58.00.
Gold has surged to new highs, breaking above
$3,600 and reaching $3,720 per troy ounce. The move appears aimed at the
extreme target of $3,850–$3,950, though overbought conditions are now the most
extreme in market history. Immediate resistance is seen at $3,730–$3,750.
Currency markets remain volatile. The EURUSD
peaked at 1.19180 last week, just shy of the 1.19500–1.20500 extreme target,
before retreating to 1.17250 after Powell’s hawkish comments. The broader
trend, however, remains intact: as long as the pair holds above 1.17000, the
path toward 1.19500 remains valid.