The S&P 500 is expected to fall slightly after approaching a major resistance at 3425 points. A breakout would form a bullish reversal pattern.
The S&P 500 and other US stock market indices have been trending well since last weekend. The S&P 500 is up nearly 6% from last Thursday’s lows, thanks to reassuring economic statistics in the US and Europe and renewed hope of agreement on a fourth stimulus package in the US. United States.
In fact, despite the disappointing NFPs, the statistics have been quite encouraging in recent days, starting with the Markit and ISM PMIs, most of which exceeded expectations. In addition, retail sales in the pound area soared in August despite economic uncertainties. Europeans continue to consume heavily, which bodes well for the economic recovery.
On the stimulus talks, investors are hopeful again after Steven Mnuchin and Nana Pelosi expressed confidence in a deal by the time of the US presidential election next month. The House Speaker even noted progress in the negotiations, stating that they will continue to work on their proposal to reach an agreement.
Stock market developments should be primarily driven by these two issues: the US stimulus plan and economic statistics. Obviously, developments in the health situation will be closely monitored. New York City has just announced the closure of schools in certain neighbourhoods from this Tuesday in view of the resurgence of cases and could soon close bars and restaurants. In particular, the more restrictive the measures implemented, the greater the pressure on the financial markets.
The S&P 500 is approaching increased strength by 3425 points
From a technical analysis perspective, the S&P 500 is expected to open slightly lower this afternoon after returning to a 3 week high of 3400 points on Monday. The outlook is bullish as long as the S&P 500 moves above its recent low of 3325 points, but the uptrend may stall as resistance approaches 3425 (September 10-16 highs).
This resistance will be decisive in strengthening the upward perspective. A breakout of this resistance would form a head and shoulders reversal pattern, paving the way for the S&P 500 to return to its all time high of around 3600 in early September.
Admission: purchase over 3425
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