Clock ticking down on S&P500

After better than expected Chinese activity data and renewed optimism towards a fiscal deal helped S&P500 futures rally towards 3500 yesterday, the overnight session ended in disappointment as the S&P500 closed 1.63% lower, at 3427.

Charts (5)

The fall coming about against the backdrop of an accelerating COVID-19 second wave and as the U.S congress made little progress towards agreeing on a fiscal package deal before tomorrow’s deadline, set by House Speaker, Nancy Pelosi.

The reaction of the market highlights its continued sensitivity to talks on a stimulus deal. Putting my politicians hat on for the moment, I can’t think of any good reasons why the Democrats would agree to a fiscal package that might boost the ailing re-election prospects for U.S President Trump.

More so given the Democrats will soon be able to launch their own fiscal stimulus package shortly after the election, if election polls are proved correct.

In light of the fading prospects of a short-term fiscal deal, the chances of more disappointment this week seem reasonably high. The recent unwinding of the largest short positions in the Nasdaq futures since the Global Financial Crisis, indicates position in the high beta Nasdaq is much cleaner than it was during September's correction.

Turning now to the charts. In our last update on the S&P500 in early October, the view was that the pullback from the 3587 high to the 3198 low during September completed an “abc” corrective pullback. However, further confirmation that the uptrend had resumed was required ”in the form of a break and daily close above key resistance 3420/30 area.”

Following this, the S&P500 traded to a high of 3541, and the upside breakout level at 3430/20 outlined above, now becomes key support.

Hence for a positive short term positive bias to remain in place, the S&P500 mustn't break/close below 3430/10. Otherwise, the risks are for a retest of the bottom of the range coming from the September 3198 low.

Clock ticking down on S&P500

Source Tradingview. The figures stated areas of the 20th of October 2020. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.