The S&P 500 opened on Friday to slim gains, as it aims to consolidate on yesterday’s slightly positive close. Investors on the index continue to look for the conclusion of the long-drawn wrangling between Democrats and Republicans over the stimulus bill.
A series of discussions between Treasury Secretary Steve Mnuchin and US House Speaker Nancy Pelosi continues, with the Speaker tweeting that a deal was close. The index also got some uplift from the approval of Remdesivir by the FDA for the treatment of coronavirus patients who were severely ill and hospitalized. This marks a turning point in the battle against the coronavirus in the US.
Analysts at Credit Suisse are confident that the neckline of the reverse head and shoulders pattern would hold and be the key to an upside push towards the all-time highs at 3588. But this remains conditional upon a deal being reached between the two parties.
Technical Outlook for S&P 500 Index
A disappointing week of price action sees the S&P 500 marginally lower by 0.82%, as the week failed to deliver the expected news that investors were hoping for with just ten days to US election day. The price projection from the 7 October break of the neckline of the inverse head and shoulders pattern is yet to be met. This expectation is still valid if the price bounces off the 3393.5 support.
The all-time high at 3588.1 remains the target, but this depends on the stimulus deal being the driver of this price move.
On the other hand, further disappointment that drives the S&P 500 below 3393.3 brings in 3335.5 and 3282.2 as possible downside targets. A drop below 3228.4 (trough that forms the pattern’s head) invalidates the pattern and opens the floodgates for sellers to drive prices
towards 3137.0.
The US Elections will also provide a fundamental trigger for the index.
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S&P 500 Daily Chart
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