The S&P 500 index has opened higher on the day as reports of possible coronavirus treatments and potential vaccine development allowed risk sentiment on the day. The upbeat US ISM Non-Manufacturing PMI data has also sustained the S&P 500’s uptick on the day, as it came in at a reading of 55.5 versus the 55.1 market consensus figure. This reading was also better than last month’s 55.0 reading. The S&P 500 is currently trading at 3322.2, still a bit short of its all-time highs.
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Technical Outlook for S&P 500
A look at the expanded daily chart shows the rays of the pitchfork, which was applied to the weekly chart and also presents the most recent support and resistance areas. A look at the price action for the last five weeks of trading shows that the S&P 500 price activity seems to be showing a double bottom pattern in evolution. The neckline is formed by the recent highs of January 14, 30 and 31.
Yesterday’s candle closed above the neckline. Today’s candle needs to maintain this closing penetration above the 3299.7 resistance to confirm the pattern and the neckline break. This move would open the door for the S&P 500 to target recent all-time highs at 3339.4, with potential for further upside to complete the measured move from the neckline break.
On the flip side, failure to confirm the breakout from the neckline leaves the pattern open, with potential to retest the immediate support targets at 3263.3 (Fibonacci 100.0% extension) and 3216.6 (previous highs of 30 December and 31 January 2020). Price retreat to the latter could allow the S&P 500 to make another push to the upside with potential for the formation of a triple bottom.
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