The U.S. economy continues to expand in Q1 2024, with a projected 2.4% annualized GDP growth, exceeding the Fed’s non-inflationary growth rate. The IMF has raised its 2024 U.S. growth forecast to 2.7%, citing strong consumer spending and a strong labor market, which added an average of 276,000 jobs per month in Q1.
Inflation is also rising, with the core PCE price index increasing at a 3.4% rate. The housing market and business spending on intellectual property are contributing positively to the economy, while trade and business spending on equipment are expected to detract from GDP growth. Financial markets anticipate the Fed will hold off on reducing interest rates until September in response to the ongoing economic growth and uptick in inflation.
Technical Analysis
Weekly Chart
Daily Chart
Trades
Weekly Chart Analysis:
The S&P 500 E-mini futures show clear strength, but a recent pullback after June rate cut expectations diminished, and the top US index dipped by 7% from its recent high. A definitive close above this pivot suggests the upward trend will persist, confirming the dominance of bulls.
Daily Chart Analysis:
A look at the daily chart shows the Awesome Oscillator turning green. The 21 SMA has turned bearish as price is trading below it.
Key Levels to Watch:
Observing price behavior around the pivot levels is crucial. The immediate support zone around 4972 (S2) needs to be held so that bulls remain in control. Resistance levels at 5231.50 and above serve as barriers to the bulls.
Potential Trades:
Bullish traders should look for entry points above the 5140 support level, using a stop loss slightly below the candle that closes above that level. Price targets are at the next resistance level of 5231.50.
Rating:
The bullish outlook stays strong, as the market’s position indicates a strong trend despite the recent pullback. This could be viewed as a simple ‘buy the dip’ but it all depends on the geopolitical tensions and how the market continues to digest the new rate path for the Fed.
