Wall Street has taken off on a positive note this Wednesday after appearing to shake off the shock of the cancellation of stimulus talks between the US President and Democratic Party leaders. The S&P 500 had quickly sunk yesterday as the stimulus hopes dimmed. The Fed Chair’s comments at an event yesterday, which cautioned on the possibility of a “downward spiral” in the US economy, helped initiate yesterday’s selloff after initial gains.
Today, the S&P 500 has opened higher, buoyed by a tweet late yesterday that called on the US Congress to expedite action on a $25 billion bailout package for US airlines. Shares of airline companies were seen to be marginally higher on the tweet.
The focus of the markets is on the FOMC minutes. Markets would be looking to see if the Fed Chair’s comments of yesterday are a reflection of what the FOMC had discussed in the last monetary policy meeting. After raising the inflation bar for interest rate hikes in September, the FOMC’s minutes would be heavily scrutinized by investors for language that could indicate how long rates will stay at present levels. Furthermore, notes about the outlook for the US economy going forward may also be on the radar of investors.
The S&P 500 is up 1.21% on the day and currently trades at 3402.9.
Technical Outlook for S&P 500
The S&P 500 index is once more challenging the 3393.5 resistance level, after a firm rejection of yesterday’s candle. The bearish engulfing pattern formed by Monday and Tuesday’s daily candles has so far not been able to find follow-through selling to drive home the expected resolution of that candlestick pattern. A successful break of this resistance opens the pathway towards 3481.6, with 3528.9 still bearing potential as a target to the north.
On the flip side, follow-through selling that comes from rejection at 3393.5 could bring in 3335.5. This move may also extend towards 3282.2 if the engulfing pattern starts to kick into price action. Further potential support targets still exist at 3228.4 and 3137.0.
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S&P 500 Daily Chart
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