Dow Jones New York Stock Exchange

S&P 500 Index Struggles to Recover Gains Above 4,200 On Red Day for US Markets

Lower crude oil prices are weighing heavily on energy stocks listed on the S&P 500 index, along with disappointing results from Chevron.

US markets are down this Friday, with the S&P 500 index giving up 0.35% of its value after the Energy Index lost 0.32% this Friday. The energy stocks were down close to 1% at market open but have managed to pare some of the earlier losses. Contributing to the bearish tone on the index are tech stocks, whose index is down 0.9%.

Personal income witnessed a 21.1% rise in March, overcoming February’s slump of 7% as the Bureau of Economic Analysis presented data that showed an increase in Core PCE Price index from 0.1% to 0.4%. Employment Cost Index also grew from 0.7% in the last quarter to 0.9%. The rise in the Core PCE Price index continues to bring up the question of whether the Fed will act earlier to taper QE or raise rates before 2023, which depresses buying sentiment on the S&P 500.

Technical Outlook for S&P 500 Index

The S&P 500 index continues to struggle to push above the 4200 psychological resistance. Price now appears to be on the way to challenging minor support formed by this week’s candles at 4176.6. If this level gives way, we could see a further drop towards 4150.4. Price needs to drop below the 23.6% Fibonacci retracement of the C-D wave of the “W” pattern, for downside targets at 4062.8 and 4022.1 (38.2% and 50% Fibonacci retracement levels) to come into the play. Additional downside targets are found at 3950.4, 3910.5, and 3870.0. 

Any of the price levels mentioned above qualify as dip-buying areas, with any bounce in price required to beat the 4200 resistance to attain Credit Suisse’s identified upside targets at 4225 and 4250. An additional target also rests at 4301.0, the 200% Fibonacci extension level from the price swing of 23 March to 30 April 2020.

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S&P 500 Index; Daily Chart

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