Today’s upbeat US Flash Manufacturing PMI Data as well as hopes that the US Senate is close to passing a monumental stimulus bill is lifting market sentiment this Tuesday. The S&P 500 is up by 7.2% as at the time of writing, following feelers that the US Senate is close to passing the $2 trillion stimulus deal to provide financial relief to American adults and businesses.
The US Flash Manufacturing PMI data came in at 49.2 versus a consensus number of 45.1. The upbeat number provided added boost to the market sentiment, allowing the S&P 500 to push upwards to the 2379.8 price level.
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Technical Outlook for S&P 500 Index
The S&P 500 is now approaching the 2401.9 resistance (17 December 2018 low), which is also close to the 23.6% Fibonacci retracement from the swing high of 2 March 2020 to the swing low of 23 March 2020. This resistance also rests on the upper border of the descending channel that has encapsulated price action since 12 March.
A break above this level takes the price action above the channel. It allows the S&P 500 to extend its recovery towards the 13 November 2017 and 2 April 2018 lows at 2550.7 (close to the 38.2% Fibonacci retracement level).
On the flip side, rejection of price at 2401.9 allows the S&P 500 to continue trading within the channel, allowing it to make another run down south towards the 2291.1 support level (19 March low), with 2182.5 lurking underneath if the price activity continues towards the lower channel border.
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