The S&P 500 index has taken a breather as investors get spooked once again by reports of new cases cropping up in other countries. Hong Kong has detected new cases despite the lockdown of Wuhan (the epicentre of the epidemic). Another coronavirus case has been identified in the US after a man who recently returned from China started showing symptoms. So far, there have been 17 deaths in China from the coronavirus.
The Chinese New Year kicks off this weekend and it is a period which is marked by intense travel all over China, with more than 400 million travellers expected to move around the country to see their families and celebrate the New Year/Spring festival.
The S&P 500 Index is down 0.2%, the most it has fallen in 3 weeks following the fall of Asian shares spanning Sydney, Seoul and Shanghai.
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Technical Outlook for S&P 500
The S&P 500 index has attained the initial resistance to the latest price upsurge at 3335.7, which is also the area where the upper ray of the pitchfork lies. After touching the 3335.7 resistance, the S&P 500 is now trading at 3314.7; about 21 points lower. Immediate support lies at 3117.3, which is where the low of the week which ended December 23 rests. Further below, the highs of the weeks ended July 15 and September 9 constitute the next support level at 3018.5. A breakdown of 3117.3 could target this new support level.
However, it must be said that bearish pressure on the S&P 500 appears to be weak and potential for further upside after some profit-taking still exists. This scenario could force renewed buying at any of the support levels as mentioned above. Renewed bids for the S&P 500 index asset could then retest 3335.7 with potential for a break as the flip side of the previous scenario.