The S&P 500 is up by about 0.3% after bouncing off session lows, but it is in danger of slipping into negative territory as the escalating US-China spat over Hong Kong is overshadowing any positive news about coronavirus vaccine candidates.
US-China tensions have gone several notches upwards as US Secretary of State said on Wednesday that the US no longer considers Hong Long to be politically autonomous from China, even as President Trump has threatened action against China over the contentious new national security law. Hong Kong was assigned special trade status with the US and risks losing this status with the new declarations. China has also vowed retaliations if the US steps into the matter.
Several tech stocks with exposure to China are suffering losses on the day.
The resistance zone depicted on the daily chart for the S&P 500 indicates the price zone to beat for the bulls. Hopes of cracking that area seem to have dissipated on the day as price action for Tuesday and Wednesday has run into this brick wall and come unstuck. The price highs of both days has tested the upper limit of this wall at 3028.3 without being able to break it. Only a breach of this wall to the upside will allow further progress of the index, targeting 3137.0 and 3257.6 (88.6% Fibonacci retracement from the Feb highs to the March 2020 lows) in the process.
On the flip side, a rejection of price at the resistance zone could send the S&P 500 downwards, where the 2844.3 and 2798.3 (50% Fibonacci retracement) price levels could be waiting to provide support. We also see 2707.7 and 2657.8 (38.2% Fibonacci retracement) in the picture, and further price decline below 2798.3 could make them relevant. This decline could then be viewed in the context of a reversal from point D of the harmonic crab pattern, which fulfils the technical expectations of this pattern.