Bulls have a firm grip over the S&P500 Futures (CME: ES), following a return to risk-on sentiment, driven by the calming of the banking sector crisis and a softening U.S. economy.

The latest factors contributing to the bullish momentum is the tapering off of U.S. consumer and producer inflation on a month-on-month basis to 0.1% and -0.1%, respectively, lower than expected. In addition, the labour market has seen a rise in unemployment, showing that the Federal Reserve’s hawkish journey is likely beginning to bear fruit.

Technical

The S&P500 Futures have been in a sustained uptrend, with price trading well above the 100-day moving average in an ascending channel pattern. Support was formed at the 4100.75 level following a rejection of the level on two occasions, while resistance was established at the 4162.50 level after a reversal.

At present, bullish traders have a clear upper hand on the market’s direction after the price respected the support level with diligence. With price treading near the ascending channel’s dynamic support and RSI levels shifting towards buying momentum, bullish traders could be in the money for a move higher, with the 4162.50 level a probable target.

Alternatively, if bearish traders pile into the market supported by volumes, the price could be lowered toward support at the 4100.75 level.

Summary

With the Retail Sales and Michigan Consumer Sentiment the only remaining high-impact economic events for the week, traders’ attention will also be focused on financial services earnings tomorrow. If the Financial Services sector produces weaker earnings, the S&P500 Futures could be weighed down as investors interpret poor earnings as a reason to disinvest.

Sources: Reuters, TradingView