ISM Beat Support Bulls But Tech Rotation Tests S&P 500 Index’s 8,150 Path

Heat Map Shows Tech Rotation

We see tech is taking a breather during today’s trading session. NVDA is down 3.33%, MSFT is down 3.75%, AMZN is down 3.26% and ORCL is looking the worst with a 6.51% decline. We’re also seeing software pressure in names like PLTR, PANW, NOW and IBM, which lines up with the broader software selling.

But we see META up by 3.11% helped by bullish analyst commentary, while WMT is up 3.54% given the Index a defensive retail cushion.

Mega Cap Tech Drags, META and Walmart Cushion

ISM Services Beat Keeps Growth Alive

We got 54.5 on the ISM Services PMI, above the 53.8 forecast and above the 53.6 prior, so the service of the US economy is still expanding. The data also shows prices still hot and employment still hot and employment still soft, so the market gets growth and inflation stickiness.

ISM Services PMI Beats Forecast

US 10 Year Yield Adds Pressure

The recent decline in US 10 year yields seem to have come to an end as the Renko bricks are back above the 21-EMA and the 50-SMA. The Supertrend still needs to flip positive but the RSI is back above 50 and trending higher and the Z-Score SMA has turned higher. We have to look to see if the US 10 year yield is making a lower high or is it really going back to retest the 4.70% resistance of several weeks prior.

Treasury Yields Try To Rebound

Red Bricks Flicker On S&P 500 Index Renko

A couple of red bricks are showing on the S&P 500 Index Renko chart as the Index is heading towards its 21-EMA and 500-SMA to find some support. Momentum has softened with the RSI pointing lower, although it is still above 50 which is a bullish sign. The Z-Score SMA, which was indicating bearish divergence earlier, is seeing the downside come to fruition, albeit only by a couple of bricks. Nonetheless, alot would be needed to convert the overall bullish nature of the S&P 500 Index to a bearish one. We’re nowhere near that at this time. The Index continues to be above its medium and long term SMAs, the 50-SMA and 500-SMA respectively.

S&P 500 Index Renko Heading To Rest 21-EMA and Supertrend Line

The Verdict

Current Trend Direction: Bullish

Bias: Positive

Support Levels: 7,240, 6,780, 6,310

Resistance Levels: 8,150, 9,280

Medium Term Path: We see the S&P 500 Index down by over 0.50% today but that’s all part of a bull market, higher highs and higher lows. You need the Index to fall to make that higher low. All in all I anticipate that the S&P 500 Index would continue on its bullish structure and hit the 8,150 target in the medium term.