S&P 500 futures are wavering today as traders reassess the 1.60% gain yesterday. The index is trading at $3,345 in the futures market while the Dow Jones and Nasdaq 100 are trading at $27,466 and $11,370, respectively.
InvestingCube's S&R Levels
Not in Sell Zone
The S&P 500 and the overall stock market gained yesterday as investors digested the latest industrial profits data from China. Investors were also enthusiastic about the weaker US dollar and the upcoming Trump and Biden report.
Today, the index is pausing as traders focus on Washington, where the White House and congress are deliberating on the next stimulus package. Democrats have suggested spending more than $2 trillion to cushion the economy from the effects of the pandemic. On its part, the White House has proposed spending about $1.5 trillion, which is still higher than what Republicans are willing to spend.
This means that the likelihood of another stimulus before the election is very slim. As a result, the implication could be that the US economy’s recovery will be at risk. Indeed, the Federal Reserve has already cautioned congress against further delay in providing this financing.
The weaker US dollar has also supported the S&P 500. The dollar index is down by about 0.20% today and is in its second consecutive days of losses. A weaker dollar is usually beneficial for the companies in the S&P 500.
Meanwhile, the CBOE S&P 500 volatility index (VIX) is up by more than 2.5% as the fear and greed index remains at the neutral level of 50. The index is in this level because of the rising demand for safe havens like bonds and rising demand for junk bonds. The two are in the extreme fear and extreme zone.
S&P 500 technical analysis
The daily chart shows that the S&P 500 reached a high of $3,951 in September. Since then, it has been in a downward trend, which pushed it to a month-to-date low of $3,210. This price was slightly below the 78.6% Fibonacci retracement level. Since then, the index has been attempting to gain and is now trading at $3,350. The index is along the 25-day and 14-day exponential moving averages.
Still, the price is still facing resistance at the descending trendline that is shown in pink. Therefore, I suspect that the downward trend will remain so long as the price is below this line.