The S&P 500 opened slightly changed on Wednesday, despite the latest headlines surrounding coronavirus vaccine candidates. Pfizer announced on Wednesday that it was applying for emergency use approval from the FDA “within days” as final data from its Phase 3 trial showed 95% efficacy in its vaccine candidate. Furthermore, Sinovac reported that early tests of its coronavirus vaccine candidate showed that 90% of patients had an immune response. However, the antibody levels generated were lower than in convalescent coronavirus cases.
As reported yesterday, markets appear to have priced in a coronavirus vaccine being released in December, which is why there is a muted response to further vaccine updates. What could produce a market surprise are delays in emergency approval or some other setbacks that prevent deployment of the vaccines as early as markets would like.
Only six out of the eleven indices measured by the S&P 500 index showed positive moves in today’s trading so far. Energy and the Industrials indices are showing modest gains, while the Real Estate Index is also losing modestly. This picture mirrors the low-volume, cautious environment that has shrouded today’s trading since the opening bell sounded.
Technical Levels to Watch
The S&P 500 remains a tad shy of the all-time high, and this price level at 3646.0 is the price to beat for buyers. The breakout from the triangle is complete, but further ascent on the S&P 500 requires a closing penetration above 3646.0 to be established. Credit Suisse economists are maintaining a projection of 3668 in February if 3646.0 is broken, provided support is held at 3585 to keep the bullish sentiment intact. This projection finds basis on a timely rollout of coronavirus vaccines, and possible passage of new stimulus by a new-look US Congress.
On the flip side, a rejection at 3646.0 would allow for a pullback towards 3588.6 (13 November high and 17 November low). This is because data shows that 85% of stocks on the S&P 500 are already trading at overbought levels. A drop below 3588.6 opens the S&P 500 to the possibility of some sideways trading, with the floor of this range at 3528.9. Only a breakdown of 3528.9 allows 3481.6 to come into focus, with the additional threat of a drop towards 3393.5 or 3335.5 becoming real if 3481.6 gives way.
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S&P 500 Index Daily Chart
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