S&P 500 Index Climbs Above 3,600 Despite Slump in Consumer Confidence

Summary:

The slump in consumer confidence in November does little to dent the surge in the S&P 500 index above the 3600 level as it chases new highs.

The S&P 500 and other US indices started the day in positive territory, with the S&P 500 index pushing up above the 3600 mark. This is coming as the US President Donald Trump sent out a veiled tweet in which he was asking the General Services Administration to move ahead with handover processes. The markets probably interpreted this move as a concession of election defeat on the part of the US President, which removes uncertainty in the outcome.

Further impetus was provided to bulls by the impressive gains registered in the stocks listed under the energy index of the S&P 500. Surging crude oil prices have translated to gains on those stocks, with the Energy Index registering gains of more than 3%. The Financials are also up by 2% on the back of rising 10-year bond yields. This upside push was enough to dwarf the small losses seen in the Technology index component of the S&P 500.

As risk flows continue to dominate the financial markets, there was a note of concern in the US stemming from the downbeat Consumer Confidence Index. Consumer confidence in the US declined from 100.9 recorded in October to the latest figure of 96.1. The decline in consumer confidence was more than the markets expected (97.7), and also follows a drop in the Richmond Fed Manufacturing Index from 29 to 15 (consensus of 20).

The S&P 500 index is now trading at 3627.9 as it attempts to challenge the all-time highs at 3646.0.

Technical Outlook for the S&P 500 Index

A breach of the 3588.1 resistance means that the all-time high mark is now under threat. A break above that level puts the S&P 500 in good stead to challenge the 127.2% Fibonacci extension at 3738.6, with the 3848.3 price level serving as an additional price target (141.4% Fibonacci extension).

Failure to break the all-time high may allow for some profit-taking, which brings in 3588.1 into focus as the nearest support. Any break of this support puts pressure on 3528.9, with 3481.6 and 3393.5 serving as additional targets to the south.