The S&P 500 index and other major US indices have made a solid start to the week, especially as Fed Governor Lael Brainard explained away the recent inflation surge as resulting from challenges within the supply chain.
These comments tried to reiterate the Fed’s stance on keeping interest rates lower for longer. As of writing, the S&P 500 index was trading at 4198.24 or a gain of 1.02%. Boosting sentiment on the index despite sparse economic fundamentals was the fall in bond yields on the day by 0.84%.
The Tech and Communications Indices were up 1.79% and 1.8% on a sector-by-sector basis, respectively. Energy stocks listed on the S&P 500 also contributed a 0.71% gain.
Technical Levels to Watch
The price burst through the 4176.61 resistance has been strong enough to warrant a challenge on the 4200 psychological resistance. If the surge continues, we could see 4220.63 become a new target, ahead of the 4260 price barrier set by Credit Suisse a few weeks ago. The double bottom setup on the daily chart makes for a potential push towards 4301.0 (200% Fibonacci retracement from the 23 March 2020 low to the 10 April 2020 high).
On the other hand, a rejection at 4200 brings 4176.61 back into contention for a retest. A breakdown of this price support allows the bears to push for a move towards the 4150.37 support. However, a continued decline below 4150.37 allows 4120.48 and 4082.72 to enter the scene as potential targets to the south.