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S&P 500 Index Opens Lower; Is 3500 The New Short-term Target?

A lack of market fundamentals as well as falling US Treasury yields are putting pressure on the US stocks markets this Thursday. All three equity indices in the United States including the S&P 500 index, opened lower as falling bond yields and several downbeat macroeconomic indices took away buying appetite from investors. 

Earlier today, data from the US Department of Labor showed that the Initial Jobless Claims rose once more from 711K to 742K. This number was higher than the market expectation of 707K by a wide margin and weighed on market sentiment.This increase in the number of first-time unemployment benefit filings for the week ended November 14 is a reflection of the impact of the second wave of the coronavirus pandemic in the US, which has forced several states to issue social restrictions that have caused businesses to be shuttered. 

The Financials index is leading all 11 sectors on the S&P 500 index lower as rising bond yields pressurize financial stocks. The Energy index is also marginally lower as crude oil prices falter.

Technical Outlook for S&P 500

As predicted yesterday, the US markets have got off to a negative footing as there has not been any market-moving news to shake buying wariness off investors. Yesterday’s decline below the 3588.6 price level has allowed sellers to drive prices towards the 3528.9 support, where the upper border of the triangle also lies. 3481.6 and 3393.5 are the immediate support targets for the S&P 500 index if the decline continues. 

On the flip side, attainment of new record highs will depend on the break of 3646.0, but this will require that buying momentum picks up and takes out the 3588.6 resistance level. The medium-term and long-term picture is for the price to continue to the upside, given that the triangle is a continuation pattern (80% of the time) which is expected to allow the initial trend to continue. Analysts at Credit Suisse are also expecting a continuation, and this was captured in the S&P 500’s analysis earlier in the week.

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S&P 500 Daily Chart

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