S&P 500 price analysis
US equities edged higher during the session on underlying optimism over a gradual reopening of the economy, but there was a late sell-off as vaccine optimism dipped and the S&P 500 index posted a loss of 1 per cent.
Market highlights from the past week
Thursday, May 14: US equities opened lower amid underlying unease over economic and earnings trends, although there was a recovery late in the day as the banking sector rebounded and the S&P 500 index posted a 1.1 per cent gain
Friday, May 15: Fed Chair Jay Powell reiterated that the central bank was prepared to do more if needed.
Monday, May 18: US equity futures posted strong gains into the New York open and gains extended during the day as global confidence increased and energy prices made further headway. The S&P 500 index posted a 3.1 per cent gain with futures little changed on Tuesday
Tuesday, May 19: US equities edged higher during the session on underlying optimism over a gradual reopening of the economy, but there was a late sell-off as vaccine optimism dipped and the S&P 500 index posted a loss of 1 per cent.
Wednesday, May 20: US equities opened sharply higher with further expectations of a robust recovery fuelled by the reopening of states and very low interest rates. The S&P 500 index posted a gain of 1.65 per cent.
S&P 500 price analysis
Let us have a look at the technical viewpoint.
Monthly: Strong selling pressure from the 3398 multi-year high. This resulted in losses of more than 35 per cent to the 2180 low. April posted net gains, but all trading was inside the March range, an indecisive inside month.
Weekly: Mixed trading for the past three weeks as we continue to trade close to the 61.8 per cent pullback level of 2937 (from 3398-2179).
Daily: Previous resistance located at 2972. 18th May price action has left a Marabuzo support level at 2905. This area has been pivotal. Trend line resistance is seen at 3014
Intraday 1-hour: We have a 261.8% extension level located at 3038.
Outlook: Although there is scope for further corrective upside pressure, with trend line resistance and a 261.8% extension in close proximity, we look for rallies to be limited.
Possible trade setup
Action: Selling at 3014
Potential return on risk to first target: R3.6 (reward 109 / risk 30)
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