The S&P 500 index and other US market indices opened the trading session lower, with the energy stocks continuing to exert downward pressure as crude oil prices slid further.
Despite impressive gains posted on Wednesday, the S&P 500 index lost momentum on Thursday, posting losses of 0.32% despite an improved Initial Jobless Claims report.
Data from the Department of Labor indicates that the number of first-time applicants for unemployment benefits dropped from 586K to 548K in the week ended April 17. This also beat the market estimate of 607K.
However, a slump in the Existing Home Sales for the second month running appears to have taken the sting off the jobless claims data. Existing Home Sales fell 3.7% monthly in March, which was worse than the market consensus of a gain of 0.8%. This data set had shown a drop of 6.3% in February.
Technical Outlook for S&P 500 Index
Thursday’s decline seems to be a fallout of the inability of the S&P 500 index to reclaim or take out the previous ATH at 4191.3. This leaves the index vulnerable to a selloff from point D on the “W” pattern. This selloff needs to take out the support at 4150.4 and the 23.6% Fibonacci retracement at 4113.2, to target the first projection point at the 4062.8 price level (38.2% Fibonacci retracement from point C to D in the “W” pattern). A further decline extends towards 4022.1, then 3981.4 and 3950.1.
On the other hand, a bullish outside day candle that takes out the all-time high is required to form a new high that re-establishes the continuation of the bullish trend. This move would target the 4200 psychological resistance (called by Credit Suisse some weeks back), and also have the potential to attain the 4301.0 price level (200% Fibonacci extension of the 23 March to 29 April 2020 swing).