US Factory Orders Support S&P 500 Rally as Index Pauses Near Record Highs

The S&P 500 Index is looking a bit winded after sprinting into fresh all-time highs. Factory orders gave the rally a helpful macro nudge of support, and the technical structure is still strong across all the timeframes and charts that I look at. But we’re not chasing blindly here. The Index is stretched, RSI on the daily has cooled from overbought levels, and the short-term Renko momentum is wobbling a little. So yeah, I’m Bull-ISH at these levels.

US Factory Orders Beat Adds Support to the S&P 500 Rally

The factory orders print is a solid little tailwind for the S&P 500 Index. Not fireworks. But useful. Orders rose 1.5% month-over-month, above the 0.5% forecast, and that tells me the industrial side of the economy isn’t rolling over. The results support the earnings story for cyclicals, industrials, transports, machinery names, and even parts of tech tied to capital spending.

But there’s a catch. Stronger factory activity can keep the Fed a bit more cautious if it feeds the economy is still too firm a narrative, especially with the S&P 500 already stretched near all-time highs.

US Factory Orders Beat Forecasts, Rising 1.5% Month Over Month

Bar Chart Showing US Factory Orders Month-Over-Month Data

Source: TradingView

Brief Pause Near Fibonacci Resistance After Record Run

All making all time highs the S&P 500 Index needs a bit of a break. The weekly chart is very constructive despite a slow start to the week. Price ripped off the 6,310 low, took back the 7,015 pivot area and is not pressing right into the 1.236 Fibonacci extension and that’s where we’re seeing the hesitation. Nothing dramatic though. Price is still above both Supertrends. That’s really important for a medium term move higher. The support is set at those levels. We’re still positioned to grind toward the 1.618 extension.

S&P 500 Weekly Chart Holds Above Supertrend Support

Weekly S&P 500 Index candlestick chart

Source: TradingView

S&P 500 Rally Cools as RSI Slips from Overbought Territory

S&P 500 just looks like it ran the London marathon. Tired and stretched. Price pushed higher from the 6,310 low and pushed above the 21-EMA and didn’t really look back since. Now with a deep cushion underneath and the RSI crossed under from 70, it is telling me that demand has eased off just a bit. A pause here wouldn’t be straight bearish. Not at all. It’s actually healthy. I would be more worried if the chart went vertical. Price needs to keep holding above the 21-EMA so the dips would look buyable. If it doesn’t then it’s another story.

S&P 500 Daily Chart Hitting Resistance with RSI Crossing Under

Daily S&P 500 Candlestick

Source: TradingView

S&P 500 Renko Pullback Looks like Digestion Not a Breakdown

Similar to the other charts the S&P 500 Renko is holding its broader bullish structure, but short term, yeah, it’s getting a bit choppy. The 12-brick Renko pushed nicely from the end of March lows and cleared the 500-SMA. After making all time highs and tagging the 7,276 zone, price has started to drift sideways with a bearish tilt and the Supertrend flipped red. A bit annoying but the Index did have a good run. The RSI is still above 50 which says that positive momentum isn’t dead, but it’s not exactly screaming higher either. And with the Z-Score SMA trending lower, the bearish move still has a bit more room to go. This is market digestion. A small shakeout. As long as price holds around 7,200 and avoids a deeper slip towards 7,100, the bulls still have a shot at taking another swing toward all-time highs.

S&P 500 12-Brick Renko Shows Short-Term Momentum Cooling

S&P 500 Renko with 12-Brick Size

Source: TradingView

The Verdict

Current Trend Direction: Bullish

Bias: Positive

Support Levels: 7,000, 6310

Resistance Levels: 7,450, 8,150

Medium Term Path: The move in the S&P 500 Index isn’t going to be a clean ride up. We saw very strong moves in the Index already. The RSI crossed under overbought levels and the Renko pullback tells me the market needs to settle before trying another serious push toward 7,450. For me that’s where I think the S&P 500 will go in the medium term. If demand holds at 7,100, dips still look buyable and the broader grind higher remains alive. Lose that zone, and we could see a deeper reset before the next leg.