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S&P 500 Reaches New All-Time High, Technicals Are looking Stretched

Fifteen minutes ahead of the cash open, S&P 500 futures were up by 57 basis points on the day. The mood was bullish as US Commerce Secretary Wilbur Ross announced on Sunday that licenses for US companies selling components to China’s Huawei would be introduced.

In the last year, the US government has made it very difficult for Huawei to develop, and the licenses are seen as step to defuse tensions.

The S&P 500 was also riding on a wave of optimism following Friday’s much better than expected US non-farm payrolls. Since this time last year, most FinTwit experts have been anticipating that the world economy would slow down enough to cause a significant bear market in stock markets. The inverse yield curve was highlighted as an excellent reason to be bearish. However, the latest NFP figures and stabilization in PMI indicators are defying that thesis altogether.

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S&P 500 Technical outlook

As I have been reporting over the previous few weeks, a break to the July 2019 high of 3026 would trigger a significant ascending triangle pattern. The pattern has been building since July and has a price target of 3210.

However, in the short-term, the S&P 500 is starting to look a bit stretch as the index has added 2.10% since Thursday’s low, and a correction to the 50% level at 3050 would not be surprising. The short-term trend will remain upwards above the 3012 level, and a correction to the 3050 to 3012 interval, will probably be viewed as an opportunity by bullish traders to buy the S&P 500.Download our latest quarterly market outlook for our longer-term trade ideas.

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