Downbeat US ISM Manufacturing PMI data is helping to sustain the bearish sentiment on the S&P 500, still smarting from last week’s substantial coronavirus-induced drop. The US ISM Manufacturing PMI came in at 50.1, which was less than the projected value of 50.5 and the previous number of 50.9.
However, the bearish momentum on the S&P 500 seems capped at the moment as markets try to make sense of the promises of central banks across the world to provide support for the global financial system amid a widening coronavirus epidemic. The US Fed has promised to use its tools to provide support for the US economy, whose growth the bank says, is at risk from the spreading coronavirus outbreak.
The S&P 500 currently trades at 2949.2 or 50 points lower on the day as at the time of writing.
The S&P 500 is now challenging the support level seen at the 2948.3 support level, which is the neckline of the Oct 2/9 2019 double bottom and the August to September 2019 triple bottom. This support also intersects with the lower ray of the pitchfork.
A break below this area opens the door towards the 2853 support line, which happens to be the first trough of the October double top (Oc2 2019 low) as well as the support price for Friday’s candle. Below this area, 2806 becomes relevant as new support if 2853 gives way.
On the flip side, a bounce at 2948 allows the S&P 500 to re-target the cluster of highs between 13 July and 18 September 2019 at 3018.5. This price level is also the price high for today. Above this area, 3066.7 (3 December 2019 lows) becomes a new resistance target.