S&P 500 Bears Look to Negotiate Third Consecutive Day in the Red 

The global equity market remains under strain as risk sentiment dipped even deeper on Wednesday, with no progress made in the negotiations around lifting the US debt ceiling. The S&P 500 futures (CME: ES) slid close to 2% in the past two trading sessions, with the bears looking to enforce further pain on Thursday. 

The market has been divided over the Federal Reserve’s stance on future monetary policy decisions, and with the release of the FOMC minutes, it became evident that uncertainty is present within the Fed as well. While certain members kept the option open for further tightening, others were optimistic about the effect of the current stance, saying that further tightening may not be required if the economy continues on the current trajectory. Heading into the end of the week, the market could look toward the jobs data later today, along with GDP growth estimates, while the highly anticipated PCE Price Index is due tomorrow.  

Technicals 

On the 1D chart, a rising wedge has formed, with the bulls looking to bounce off the daily pivot support at 4,135.50. Resistance at 4,156.75 (R1) is under threat of a breakout, which could bring higher resistance at 4,178.00 into play ahead of the data releases in the closing sessions of the week. 

While softer economic data could boost the futures on bets of a more dovish Fed, resistance at 4,205.75 could prove tricky for the bulls if no progress is made on the debt ceiling talks. However, if the bulls do break through, they could shift out of the wedge toward 4,249.25. 

Alternatively, sticky economic data could erase optimism around the policy pivot in the latter half of the year, which could see the bears retesting the pivot point at 4,135.50 to break down the rising wedge. In this case, a breakdown of support at 4,104.50 (S1) could confirm the leg down toward 4,086.75 and 4,061.25. 

Summary 

The sour market sentiment continues to weigh on the global equity market. If no progress is made on the debt ceiling talks, robust economic data from the US could trigger a wedge breakdown in the S&P 500 futures toward 4,104.50. 

Sources: Koyfin, Tradingview