Excellent recovery on the US ISM Manufacturing PMI data from 52.6 to 54.2 is boosting the S&P 500 this Monday. Today’s data trumped the market expectations of 52.2 and added to the prevailing positive sentiment for the day to send the S&P 500 to the 3293.8 price level; a gain of 0.7% at the moment.
The boost in manufacturing activity in the US provides a much-needed boost to the market, which had an underwhelming July as an increase in coronavirus cases continued to weigh on sentiment.
The markets are also waiting on the conclusion of negotiations on the new round of stimulus packages by the US Congress. Talks between Democrats and Republicans stalled over the weekend over failure to agree on the amounts paid as unemployment benefits. Republicans want the checks cut from $600 a week to $400 a week, while Democrats want the current figures maintained. Both parties are consensus over new $1200 checks to workers.
Technical Outlook for S&P 500
The index has by today’s move, failed to confirm the breakdown of the rising wedge, at least for now. With price back into the wedge, attention can shift to price behaviour around the support-resistance areas on the daily chart. The next upside target is the 3335.5 price resistance, which is also a price level that intersects the wedge’s upper border. A breakout above this price targets the 3400 price level and also invalidates the wedge. However, a rejection at the 3335.5 resistance coincides with a rejection at the wedge’s upper border, allowing the S&P 500 to make another run to the south in a new attempt to break down the wedge. A successful breakdown of this pattern targets the 3228.4 support, with 3137.0 and 3070.8 lending themselves as further downside targets.
On the flip side, immediate support for Dow Jones index is at 25,096 the low from yesterday. Next support for the Dow Jones will be met at 24,952 the 50-day moving average. A break below 24,952 might open the way for a test of 24,755 the 100-day moving average.