The S&P 500 has gained roughly 17% year-to-date, fuelled by the AI mania that magnetized investors toward a handful of big tech names.

After hitting a fresh 2023 high last week thanks to the cooler-than-expected US inflation data, US equity bulls are certainly in the building.

The strong earning results from big Wall Street banks last Friday could support upside gains, possibly pushing the S&P 500 higher. However, this is likely to be influenced by fresh fundamental and technical forces over the next few days. Taking a quick look at the technical picture, the index remains in a firm uptrend on the daily charts. The daily close above 4500 could encourage an incline towards 4580. Should prices slip back under 4500, bears could target 4463.

This could be another volatile week for the SPX500_m and here are 3 reasons why:

1. US earnings season 

Earnings season is set to enter a busy week as the focus falls on large-cap companies. The likes of Bank of America, Morgan Stanley, Goldman Sachs, Netflix, and Tesla among others will announce their quarterly results. These results are likely to be closely scrutinized by investors for more insight into the health of the economy and corporate America. It may be wise to keep an eye on Tesla which is within the top 5 holdings in the S&P 500. The company is set to post its Q2 results on July 19 after the closing bell.

Ultimately, if the company earnings impress and stimulate risk appetite, this could propel the SPX500_m towards a fresh 2023 high beyond 4530. Alternatively, a set of disappointing earnings could see the index experience a decline back towards 4463 and potentially lower.

2. Key US economic data

Some key US economic releases may influence the S&P 500 this week.

On Monday, the US Empire manufacturing will be in focus. Attention will be directed toward the key US retail sales and industrial production figures on Tuesday which could provide fresh insight into the health of the largest economy in the world. Thursday sees the US initial jobless claims which have the potential to impact Fed hike expectations.

• If overall US economic data disappoints, this could fuel expectations around the Federal Reserve pausing rates beyond July – a development that will be welcomed by US equity bulls.
• A solid set of economic reports could strengthen the argument around US rates remaining higher for longer – a scenario that may drag the SPX500_m lower.

3. Technical forces

As highlighted earlier, the SPX500_m remains in a bullish trend on the daily timeframe. There have been consistently higher highs and higher lows while prices are trading above the 50, 100, and 200-day SMA. Should 4500 prove to be reliable support, this could springboard prices towards 4580 and 4640, respectively. Should prices slip back below 4500, bulls still have a chance to fight back if 4463 becomes a reliable support. A scenario where prices slip below 4463 may trigger a selloff towards 4390 and 4332, respectively.

Zooming out on the weekly timeframe, bulls seem to be building momentum after securing a weekly close above past resistance at 4332. Although prices are respecting a weekly bullish channel, the weekly Relative Strength Index (RSI) signals that prices are flirting around overbought levels. A solid breakout above 4500 may pave a path to higher levels with 4640 and 4800 acting as key points of interest. Alternatively, if 4500 proves to be a tough nut to crack, prices may slip back towards 4332 and lower.