The S&P 500 is slightly higher on a day that has seen renewed optimism for a coronavirus cure. Russian President Vladimir Putin announced the rollout of the country’s coronavirus vaccine, with his daughter being one of the first recipients. Furthermore, available data show that the coronavirus pandemic in the US is starting to show signs of slowing. What is perhaps slowing down the march of the S&P 500 towards attaining new record highs is how the stimulus package approval is being handled.
President Trump had to use an emergency clause to extend the enhanced payments to the unemployed, albeit by a reduced amount of $400, along with a payroll cut. But House Speaker Nancy Pelosi described the move as “absurdly unconstitutional” in a CNN interview with Dana Bash. Pelosi has insisted that the executive orders issued by President Trump do not cover the scope of payments needed to address the needs of the American people.
Perhaps a negotiated consensus between Democrats and Republicans is what is needed to drive the S&P 500 towards new highs.
Technical Outlook for S&P 500
The price candle is testing the upper barrier of the rising wedge pattern. This line was tested yesterday, but the price candle failed to breach it. This is the 4th successive test by a daily candle, and so far, the price action has held firm. At 3362.2, the S&P is still short of the 2020 highs (3393.5). This price is the level to beat for bulls. A break above this level takes the S&P 500 into all-time highs. However, this move will depend on the candles being able to breach the upper wedge border, which will invalidate the pattern.
However, if the border holds firm and prices retreat as a result, then 3335.5 becomes the next downside target, and this has to give way for price to target the 3228.4 support. This move would be the breakdown move that completes the resolution of the rising wedge according to technical expectations, and puts the index on the path to a measured move towards 3137.0, consequent upon 3228.4 being taken out by continued decline.