The S&P 500 index futures are wavering today as investors continue focusing on stimulus issues in the US. The index is ignoring a bullish call by Goldman Sachs analysts, who believe that it will soar to $4,300 in 2021. At the same time, the fear and greed index, which is built on the S&P 500 remains at the extreme greedy zone of 87 while the CBOE VIX index has jumped by 0.42%.
In a statement yesterday, Chuck Schumer and Nancy Pelosi approved the bipartisan $908 billion stimulus package. That was a positive sign considering that the two are important leaders in the Democratic caucuses.
However, in a statement, Mitch McConnel, the leader of the senate unveiled a $300 billion package that will provide help to companies and businesses. Still, this smaller package will not get support, risking a sustained delay of another stimulus. This is possibly why the VIX index has soared by about 0.40% today, adding to the 1.45% gains made yesterday. It is trading at $21.17.
Meanwhile, in an interview with Bloomberg, David Kostin, the respected Goldman Sachs analyst, predicted that the S&P 500 will soar to $4,300 in the coming year. That implies a 26% increase from the current level.
The fear and greed index is also in the deep green, which is evidence that investors are still greedy. This performance is mostly because the stock price strength, safe-haven demand, stock price breadth, put and call options, and market momentum are all in the extreme greed zone. Only the junk bond demand is in the fear zone.
Similarly, the Dow Jones and the Nasdaq 100 index are also little changed. And in Europe, futures tied to the DAX index and FTSE 100 are tilting lower.
On the daily chart, we see that the S&P 500 index has been on a strong rally after it crossed the previous resistance at $3,588. At the current price of $3,670, the index is just a few points below the all-time high of $3,683 that it reached last week.
The rally is supported by the weaker dollar and the 50-day and 100-day exponential moving averages. The Relative Strength Index is also slightly below the overbought level of 70. Therefore, the outlook for the index remains bullish as the Santa rally gets underway.
