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S&P 500 Set for Higher Open As Markets Await US-China Phase 1 Deal

Dow Jones New York Stock Exchange
Dow Jones

The S&P 500 index has opened higher as all three US markets continue to break records to the upside. Now that anxieties over a US-Iran war have all but dissipated, investors in the US markets are focusing squarely on the US-China trade situation, with the expected signing of the Phase 1 deal on Wednesday between the US and their Chinese counterparts.

Already, some of the stocks that are expected to benefit from the deal are all experiencing demand. Tesla, which is listed in the Nasdaq, gained 2.3% in pre-market after Oppenheimer raised their outlook on the stock. However, graphics chipmaker Nvidia Corporation is just one of the S&P 500 stocks that have outperformed Tesla. Nvidia is directly exposed to the US-China trade situation and a phase 1 deal will see this stock continue its upward trajectory which has seen its share price nearly double since May 2019.

Read our Best Trading Ideas for 2020.

Technical Outlook for S&P 500 Index

The S&P 500 is currently up 0.29% and is trading at 3,274. 93 as at the time of writing. This represents a slight pullback from last Friday’s all-time highs of 3285.85. At present levels, the S&P 500 is testing the immediate resistance posed by the 100.0% Fibonacci extension area at 1.3263.3, traced from the 2009 swing low to the 2015 swing highs on the weekly chart.

If the present uptrend is maintained and this resistance is broken, this opens the door for a retest of Friday’s all-time high, with potential to aim for higher prices. To this end, the 161.8% Fibonacci extension area may offer itself as the next target.

On the flip side, failure to break above the 100.0% Fibonacci extension target could allow for the S&P 500 to experience some retracement, with immediate medium-term downside targets seen at 2951.5 and 2853.8 (23 Sep 2019 low).