S&P 500
The S&P 500 is holding on to its gains as this week’s initial jobless claims report showed that 1006K Americans sought unemployment benefits for the first time. This figure was mildly higher than the consensus number of 1000K and less than last week’s 1104K claims.
This number shows that the initial jobless claims have stagnated around the 1 million mark, even as the coronavirus pandemic continues to sweep across the US and financial aid from the US government is still not forthcoming. Negotiations between Democrats and Republicans over new stimulus payments appear to have stalled.
Investors on the S&P 500 appear more focussed on the speech by FOMC Chair Jerome Powell, where he announced that the Fed would pursue a new inflation targeting regime by targeting moderate extensions above and below the 2% target as opposed to the previous hard target of 2%. Financial shares on the S&P 500 as well as T-bond yields gained on this news.
As at the time of writing, the S&P 500 was trading at 3492.7, just below the intraday all-time high reading of 3501.2.
Price action has invalidated the former rising wedge and its place, a channel appears to have formed. Price is chasing the upper border of this channel as it aims to post new highs. The 100% Fibonacci extension from the March 2020 low to the high of April 2020 and subsequent retracement dip, appears to be the new resistance target. This target is at 3528.5 and seems to be in the crosshairs of the channel’s return line.
On the flip side, retreat from the channel’s upper border targets the 3393.5 support. Further support targets at 3335.5, 3282.2 and 3228.4 are achievable only if the channel gives way. Otherwise, sentiment remains bullish, and any dips in price may induce new demand on the S&P 500.
