- Summary:
- Downbeat consumer confidence data weigh on the S&P 500 index, extending its losses for the 2nd straight day as coronavirus-induced risk-off sentiment grows.
Downbeat US Consumer Confidence data as well is helping to pile more woes on the S&P 500 index, already being hammered by coronavirus-induced market fears. The S&P 500 index is trading at 3205.0 as at the time of writing, extending yesterday’s steep losses on the index as US Consumer Confidence fell to 130.7, which was less than the consensus figure of 132.6.
The drop in US consumer confidence has proven to be a dampener for the S&P 500 index, and if traders were looking for additional reasons to sell the S&P 500 index asset, this is it. The S&P 500 opened with early gains as tech stocks opened higher than the previous day’s closes, but any enthusiasm about recovery has quickly evaporated on the US data.
Further headwinds have appeared as two more companies, United Airlines and MasterCard, have both cut their earnings guidance for 2020 as a result of the ongoing coronavirus outbreak.
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Technical Outlook for S&P 500
The S&P 500 index had its worst day in 2 years yesterday, and this drove the asset towards the 3228.2 support level, having taken out the previous support levels formed by highs of 6 January (3249.9), 2/3 Jan and 3 February (3263.6) and 3284.6.
Today’s price movement has taken the S&P 500 below the 3228.2 support and also through the 30 December, 31 January and 24 February lows at 3216.5. We need to see a 3% penetration close below the 3216.5 price level, or at least two daily candle closes below this level to confirm the breakdown of that price level, which then opens up the pathway towards 3156.1, where the middle ray of the pitchfork interacts with the previous low of 13 December 2019. If price continues to drop below this level, 3117.6 becomes a relevant support target.
On the flip side, failure to sustain the violation of the 3216.5 support could boost the chances of a price recovery to 3228.2, with 3249.9 being the next logical target.