After last week’s heavy losses on coronavirus-induced fears, the S&P 500 index has so far failed to continue on its downward push after buyers forced prices upwards from Friday’s lows.
The index was helped by the outcome of the October Markit Manufacturing PMI data, which showed a reading of 53.4; higher than the market consensus of 53.3. The variant of this data set produced by the Institute of Supply Managers (ISM) indicates that economic activity in the manufacturing sector in the US grew by 59.3. This reading trumped the consensus and previous numbers of 55.6 and 55.4, respectively.
The rally of the S&P 500 sent all 11 major indices of the S&P 500 higher. The Materials Index was the toast of investors with a 1.65% gain at the time of writing. Despite the drop in crude oil prices, the Energy Index was only marginally higher. Sentiment on US President Donald Trump retaining fracking through an executive order as he indicated in his weekend Pennsylvania rally is perhaps what is maintaining sentiment in that area.
Further moves on the S&P 500 for the week will be determined by the US Elections outcome and the jobs numbers on Friday.
Technical Outlook for S&P 500 Index
Today’s candle opened with an upside gap above Friday’s close, following the neckline bounce on the previous candle. This move means that the potential double top on the daily chart remains in evolution.
Continuation of the upside bounce allows the S&P 500 index to aim for 3335.5 as the initial upside target. Above this level, 3393.5 assumes importance as a new resistance, having been breached earlier when it held as support. 3481.6 and 3528.9 remain the additional targets for bulls, and this move would probably need Trump’s re-election to work out in the short term.
On the flip side, the neckline at 3228.4 would need to be taken out by sellers to open the door to downside targets at 3137.0 and 3070.8. Price projection from the pattern shows that a move to 3028.3 or even 2961.4 is possible in the short term.
Don’t miss a beat! Follow us on Telegram and Twitter.
S&P 500 Index: Daily Chart
More content
- Download our latest quarterly market outlook for our longer-term trade ideas.
- Follow Eno on Twitter.
- Do you enjoy reading our updates? Become a member today and access all restricted content. It is free to join.