S&P 500
The S&P 500 has surged to new highs this Monday after the US Food and Drug Administration (FDA) approved the use of plasma in the treatment of coronavirus patients. US President Donald Trump has hailed the use of convalescent plasma, granted under emergency authorization as “a historic breakthrough”.
The treatment is not new and has been tried in previous Ebola Virus Disease outbreaks such as that of Kikwit, DRC in 1995 with inconclusive outcomes. It involves transfusing sick patients with the serum of patients who have recovered from the disease (and who now have antibodies), in the hope that the antibodies formed in the recovered patients could fight the virus in the sick patients.
The White House had suggested that there were political undertones in the delay in granting the FDA emergency authorization. However, the FDA’s Chief Scientist says that the use of convalescent serum should not be considered a new standard of care for the treatment of coronavirus patients.
The US markets have chosen to ignore the controversies and accusations/counter-accusations and have decided to take the good news and ride with it. The S&P 500 is trading at 3417.2, or 0.59% higher as at the time of writing. Leading the charge on related stocks in the US market are AstraZeneca, which is up 1.94% after reports emerged that its vaccine candidate developed with Oxford University could receive fast-tracked approval. Catalent, which has opted to make a drug substance for AstraZeneca’s vaccine candidate, is also up 2.34%.
Today’s upside gap pushes the S&P 500 well above the 3393.5 resistance, and a close of today’s candle above that price level sustains the breakout move, effectively invalidating the rising wedge that had been in-formation since June. The Fibonacci extension targets to watch for include the 100% target at 3528.5, which could be preceded by psychological support at 3500, followed by other extension pitstops at 3738.6 (127.2% extension) and 3848.3 (141.4% extension).
On the flip side, failure to sustain the breakout above 3393.5 could allow for a pullback to retest 3335.5, with 3282.2 and 3228.4 lining up as potential retest targets to the south.
