S&P 500 Index: Needs A Strong NFP Number to Break Towards 4453

Summary:

The S&P 500 index continues to range-trade ahead of tomorrow's NFP number. A strong employment report could trigger a breakout from the triangle.

A drop in the initial jobless claims for the week ended July 31 has allowed the S&P 500 index to experience some recovery after yesterday’s modest decline.

The S&P 500 index is up 0.34% as of writing. This move comes after the Department of Labor reported a drop in first-time claims for unemployment benefits from 399K to 385K.

There was a very marginal drop in the 4-week average, with continuous jobless claims also dropping by 366,000 to 2,930,000 for the week ended July 24. This number fell below forecasts of 3,260,000. The mood on the S&P 500 can be described as one of cautious optimism, ahead of tomorrow’s jobs numbers for July.

Technical Outlook for S&P 500 Index

Price continues to trade in the range formed by the 4422 resistance and the 4393 support. The price pattern favours the bulls, and could lead to a break of the 4422 price ceiling. A breakout targets 4453 initially, with 4561 (127.2% Fibonacci extension) lining up as a potential upside target for the future.

On the flip side, a breakdown of the 4393 support negates the ascending triangle, opening the door for a decline towards 4368 initially. A further drop towards 4324 or 4275 marks a deeper correction, which could also open the door towards 4257.