The S&P 500 index is up 2.47%, bouncing back from yesterday’s steep 5.89% drop as bulls attempt to take back control from the bears. Yesterday marked the worst day for the S&P 500 index since the selloff of February/March 2020.
Hopes of the global stimulus were revived on Friday after policy actions around the world helped push back on risk-off sentiment. The German government reduced the Value Added Tax, with the Economic Minister of Germany Peter Altmaier indicating the government’s desire to ensure that the economy’s bottom did not carry beyond H2. Similar packages have been promised in the UK and Japan.
The rebound of the S&P 500 followed similar gains on European and Asian indices. A recovery in the Consumer Sentiment Index to 78.9 in June 2020, up from the 72.3 registered in May, further boosted market optimism and has allowed the S&P 500 to get a reprieve from yesterday’s selloff.
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The index is currently trading at 3075.9, in what looks like a failed attempt at breaking below 3028.3. Price is now resting on 3070.8, where a cluster of lows from November 2019 and the 3 December 2019 low lie. The price remains above the support zone and searches for direction in what has been a relatively quiet opening to the index.
A breakdown of 3070.8 allows the price to retest the support zone from where bulls shoved price action back up. Only a failure of this area will allow the S&P 500 index to approach 2844.3, with 2707.7 remaining relevant to the scheme of things.
A bounce of 3070.8 extends today’s advance and allows the price to target 3137.0. Above this level, 3257.8 becomes the next logical target.