Traders hoping for a bullish response on the S&P 500 were disappointed on Tuesday as the statement from the G7 meetings failed to provide language that called for coordinated response against the coronavirus.
According to the G7 statement, G7 countries were closely monitoring the coronavirus outbreak and would stand ready to use policy tools. But the statement was scant on the actual deployment of the policy tools, a possible stimulus or any action on interest rates.
Adding to the S&P 500’s inertia for the day is the statement by VISA Inc on Monday evening, that it was lowering its earnings outlook by 2.5 to 3.5 percentage points lower than the range it had previously issued. VISA also stated that the coronavirus outbreak had created a “sharp slowdown of our cross-border business”. The company blames the drop in traveller numbers to Asia who would have engaged in card-present and card-not-present travel spending.
The S&P is presently trading at 3080.5, off intraday highs of 3101.7 in a mostly choppy day of trading.
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Technical Outlook for S&P 500
The Fear and Greed index of the US markets continues to remain at the lower end of the spectrum, showing extreme market fear as investors continue to remain wary of the impact of the coronavirus on global markets.
The long-term outlook continues to remain negative, as the coronavirus outbreak continues to spread into other countries. At least 20 new countries have been added to the list of affected nations, and with the lack of any decisive action by the G7, the markets may have to look towards individual central banks for action.
The markets are pricing in a rate cut in the March 17 meeting of the Fed. However, short term traders continue to look for a possible direction.
3117.3 is the immediate upside target. A recovery looks set to hit this target, with 3156.1 and 3216.5 (which intersects the median ray of the pitchfork) being the upside targets along the way.
A breakdown of 3066.7 allows the 3018.5 and 2948.3 support areas to become new targets if the selloff resumes.