- Summary:
- Spikes in coronavirus cases around the world and delay in passage of additional coronavirus stimulus rattles investors, sparking a selloff on the S&P 500.
A combination of factors has sent the S&P 500 index into the red at the start of the new trading week. Friday saw the highest number of new coronavirus cases officially recorded in a single day since the US outbreak began in March 2020. There is also no hint of a new coronavirus stimulus package being passed by the US Congress with a little over nine days to the US Presidential election.
In the run-up to the week, hopes of the passage of the new stimulus bill before the US Presidential election had lifted sentiment on the S&P 500 slightly. But with each passing day that brings the US Presidential elections closer, hopes of a deal being reached before the elections have started fading.
The coronavirus situation is now starting to affect risky commodities. Crude oil prices fell heavily on Monday, as new demand concerns have emerged with the rise in coronavirus cases and accompanying lockdowns. The energy index of the S&P 500 is sharply lower on Monday, leading all 11 indices on the index to the downside. The S&P 500 is down 2% at the time of writing. Airline and travel stocks listed on the S&P 500 index are all down.
Technical Outlook for the S&P 500 Index
Today’s price drop is testing the support level at 3393.5. So far, this support level has managed to hold up the sellers on the S&P 500. If selling momentum can overcome the support level, we could see the index dropping to the 3335.5 support level, with 3282.2 and 3228.47 serving as additional targets to the south. The downside price move is also a consequence of the progressively lower highs seen on the S&P 500 index daily chart.
On the flip side, a bounce at the current support level could allow for a short-term recovery towards 3425.0. 3481 .6 remains the only barrier that stands between 3425.0 and the 3528.9 resistance level. The all-time highs at 3588.1 will only be able to be achieved if a bounce occurs from the 3393.5 neckline support of the reverse head-and-shoulders pattern seen on the daily chart.
S&P 500 Index Daily Chart
