The S&P 500 index is trading flat on the day, after a seesaw session that has seen the index attempt to recover from yesterday’s pullback as well as today’s initial selloff. Attempts to breach 3,150 to the upside failed on the day as risk-sentiment soured in the markets.
Soaring coronavirus statistics in Arizona, Texas, Florida and several other US states created a demand for safety, with the US stock markets all struggling on the day to register significant gains, after a bright start to the week.
The S&P 500 index is presently trading at 3153.0, after hitting as low as 3,136.5 on the day. New York reported 692 new cases of the coronavirus as at press time, with case counts in Arizona and Florida also rising by 3.4% and 4.7% respectively.
Technical Outlook for S&P 500
The S&P 500 index was unable to break above the 3228.4 resistance to continue the sequence of higher highs, which could have complemented the higher lows to resume the uptrend. The peak formed by this week’s highs is lower than the price peak of early June 2020, which indicates that the recovery trend may have stalled. The rise in coronavirus cases has added a fundamental factor to the entire setup, putting the S&P 500 at risk of a selloff.
The support zone which has 3028.3 as the ceiling and 2961.4 as the floor, continues to prop up the S&P 500, with the 200-day simple moving average reinforcing that zone as a critical price level.
Price is presently testing the 3137.0 support area, which constitutes the immediate support. A breakdown of this area targets 3070.8 initially, with the support zone lying just underneath. Only a failure of this support zone would trigger a significant price decline, which could run down to 2844.3 and 2793.4 (50% Fibonacci retracement from the swing high of 19 February to 20 March).
On the flip side, a bounce from the 3137.0 support targets the 3228.4 resistance. Only a break of this resistance establishes a new high which would then indicate a continuation of the recovery trend. 3335.5 would then become the next resistance target.
S&P 500 Daily Chart