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S&P 500 Forecast: Mixed US Data and Renko Support Keep Bulls in Control
By:
Key Points:
- US macro data is mixed but still broadly supportive, with building permits, housing starts and the Composite PMI all beating or holding above thresholds.
- Manufacturing is the weak spot, as the Philly Fed Index dove to -0.4 versus the 18 forecast, raising caution around cyclicals, industrials, materials, and earnings momentum.
- Renko bricks are above the 50-SMA and 500-SMA, but a positive Supertrend flip and a Bullish Percent Index move above 50% would strengthen the bull case.
US Building Permits Beat Forecasts, Hinting at Housing Resilience
US building permits came in stronger than expected at 1.44M, ahead of the 1.39M forecast and above the prior 1.36M level. Builders are still seeing enough demand, or at least enough confidence, to keep future construction plans moving.
US Preliminary Building Permits Rose to 1.44M in May 0226, topping the 1.39M Forecast
US Housing Starts Beat Forecasts, But Momentum Still Cools
US housing starts came in at 1.47M, ahead of the 1.41M forecast, so the data is better than feared. However, there was a slight dip from the reading before, showing that the housing market is wavering a little.
Philly Fed Manufacturing Slumps Into Contraction
The Philly Fed Index was way below the 18 forecast, coming in at -0.4. This is sharply weaker than the prior 26.7 reading, so this is disappointing. Anything below 0 points to contraction, and after a strong April reading, this sudden drop suggests factory momentum cooled fast.
Philadelphia Fed Manufacturing Index Fell to -0.4 In May 2026, Badly Missing The 18 Forecast
US Composite PMI Holds In Expansion Territory
The US S&P Global Composite PMI Flash came in at 51.7, which keeps the economy on the right side of the 50 expansion line. Business activity is still growing across services and manufacturing, but the reading isn’t strong enough to say that the economy is overheating.
US S&P Global Composite PMI Flash Printed At 51.7 In May 2026, Signaling Modest Business Activity Expansion
S&P 500 Renko Chart: Bulls Pause Above 50-SMA Support
There’s a slight drift to and fro, back and forth with the S&P 500 Index as it rests snuggly between the 50-SMA and the resistance of the negative Supertrend. Is it going to pop higher or lower? The RSI is above the 50 line but pointing down while the Z-Score SMA is trending higher. It seems that a flip in the Supertrend would confirm the move higher in the S&P 500 Index.
20-Brick S&P 500 Renko Chart Shows Cooling Rally, With Price Holding Above the 50-SMA and 500-SMA
Resistance Levels: 7,450, 8,150
Medium Term Path: The S&P 500 is expected to trend higher in the medium term but it needs a little more confirmation. The bricks are above the respective 50-SMA and 500-SMA on the Renko chart so the trend is fine. But we need to see a Supertrend flip to positive. Short term market breadth, as observed by the 20-SMA, is back above 50% which is a very good sign. Now it’s just for medium term market breadth, as seen by the S&P 500 Bullish Percent Index to get back above 50%. Slowly but surely it will it seems.
About the Author
Cedric Thompsonauthor
Cedric Thompson, CMT, CFA, is an investment strategist with experience in asset management, corporate strategy, and multi-asset investing.
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