S&P 500 futures
have declined by 0.34%
to 6,717 points this week. The benchmark is deteriorating despite the end of the U.S. government shutdown
and signs of pent-up demand building in the U.S. economy. Market
participants are hesitant, afraid of making wrong moves amid extremely poor
visibility. A fog of missing data has settled over the markets.
As soon as the U.S.
House of Representatives passed the bill for temporary government funding, a hunger
for unpublished economic reports strike the markets. Investors
expected to receive everything at once: September and October inflation and
labour market data back-to-back. These
figures were expected to confirm economic cooling paving the way for a Federal
Reserve (Fed) interest rates cut in December. Combined with a rebound in
suppressed demand, this could propel the S&P 500 index above 7,000 by year-end. This scenario was supported by technical indicatirs.
The index had briefly moved above the key resistance level of 6,850 points. Had
it sustained above that level, a new rally would likely have already begun. But
on Thursday Kevin Hassett, White House economic advisor, said that the full September jobs report may only be released next week,
while October data will come in a cropped form without unemployment figures,
since household surveys were not conducted during the shutdown.
Markets are now navigating through
uncertainty. With no clear path
forward, traders have chosen to wait. In the meantime, the S&P 500 has
slipped lower, closing the price gap of November 10 at 6,740.
However, selling further now feels risky. A drop below 6,700 points could accelerate the decline toward 6,500, where another open gap sits. Moreover, investors understand that the broader uptrend is likely to
resume before year-end. Even at current levels, valuations are starting to
attract buyers.
A similar situation
occurred in 2019, when S&P 500 futures fell 1.50% in a single day after shutdown was over. Yet within the next two trading sessions, losses were recovered and a three-month rally of 12.0% was established. No one wants to miss such an opportunity again.
Large investors were taking profits this week. The SPDR S&P 500 ETF Trust
(SPY) reported net outflows
of $3.59 billion this week, excluding
Thursday and Friday. However, this follows last week’s largest inflow since
April of $12.0 billion. So, overall positioning remains
bullish.
Next week will be critical. If the benchmark
holds near current levels, the odds of recovery and re-entry into a rally will
rise sharply. In addition to
long-awaited U.S. data, markets await Nvidia (NVDA) Q3 earnings report. The AI sector leader cannot afford a miss.
The technical outlook for the S&P 500 has
flipped again. The index has
transitioned from a bearish to a bullish structure with a primary upside target
of 6,850–6,950 points. A confirmed break above 6,950 would
activate the extreme rally scenario toward 7,200–7,300.
In the oil market, the technically unfavourable
phase continues and is expected to last until the end of November. Prices not only fail to sustain above the
three-month broken support zone of $65.00–$67.00 per barrel of Brent crude but they are struggling to hold close to $65.00. If prices
cannot break higher by late November, the downtrend will likely extend to
$55.00–$57.00, which is not far from the final bearish target of $45.00–$55.00.
Gold prices are in consolidation. The key
support zone at $3,800–$3,900 per troy ounce remains intact. A sustained move
above resistance at $4,320–$4,420 would signal the start of another major
upward wave.
In the currency market,
the U.S. Dollar is retreating. The EURUSD has reached resistance at
1.16400–1.16600. A confirmed breakout above this zone would open the path to
close the gap at 1.17380.