The S&P 500 index and other US indices have taken a very hard hit this Wednesday on the back of rising coronavirus cases and the risk aversion that enveloped the markets just before the NY session. France is extending lockdowns, and a shuttering of indoor dining in Chicago is just the latest attempt in a distorted US response to contain the worsening local coronavirus situation.
The Goods Trade Balance came in at -$79.4billion, which was not as bad as the previous figure of -$83.1 billion or the projection of -$84.4 billion. But this figure had no impact on market sentiment, which is fully centred on the worsening coronavirus situation, the lack of an additional stimulus package after months of wrangling, and a US election where the outcome remains clouded.
Technical Outlook for S&P 500 Index
Today’s opening slide continues the correction after the lower high of 12 October indicated that the recovery had probably stalled. The breakdown of the neckline also invalidates the reverse head and shoulder pattern.
On the daily chart, we also see that today’s candle is challenging the 3335.5 support level. A breakdown of this support area opens the door towards 3282.2, with 3228.4 lining up as a viable downside target.
On the flip side, failure to confirm the breakdown of 3335.5 allows for a recovery towards the longstanding neckline support-turned-resistance at 3393.5. The index is now at a point where there must be a strong fundamental influence to force a recovery beyond 3393.5. This has to come either from a coronavirus stimulus deal, or probably a Trump re-election which for the markets, would be a vote for stability.
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S&P 500 Daily Chart
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