How has the S&P500 pushed through 3000?
Fiona Cincotta May 27, 2020 9:07 PM
S&P 500 is trading comfortably over the key psychological 3000 mark, a 37% rally from the mid -March low, a turnaround that seemed impossible just two months earlier.
The S&P closed up 1.2% in the previous session at 2991 after hitting a high of 3021. S&P futures are pointing to a jump on the open, taking the US index comfortably over the key psychological 3000 mark.
The rally is clearly not based on economic data, which continues to print a horror show. Almost 25% of the US working population has signed up for unemployment benefits, manufacturing and service sector activity remains deep in contraction, retail sales are at a record low and consumer sentiment is only very gradually lifting. The recovery in the market is well ahead of any economic recovery seen in macro data.
Instead the rally has been fuelled by extraordinary stimulus measures by the US Federal Reserve and other central banks across the globe, in addition to a $2 trillion rescue package from Congress and growing optimism of a covid-19 vaccine.
Inovio is the latest company to inform the market of progress in its vaccine development. The update comes hot on the heels of encouraging updates from Novavax, Modern and Oxford University to name a few.
The push high is also being driven by a rally in a handful of tech giants Facebook, Amazon, Microsoft, Apple and Google parent Alphabet. These tech giants make up around 20% of the weight of the S&P. These are stocks which jumped over the lockdown period as current conditions support the transition to tech.
The US lags around 2 months behind China in coronavirus crisis terms – both outbreak and recovery. China’s economy is showing a gradual recovery. The composite PMI is back above where it was at the start of the year despite halving in January, and factory profits are down -4.3% year on year, a significant improvement from the -35% decline in March, although still far from ideal.
Whilst initial jobless claims have been a strong focus over the past two weeks continuing claims will now attract more attention for signs of job seekers being re-hired as states reopen their economies. Whilst the S&P has risen higher regardless of horrendous jobless claims data, surely at some point if continuing claims don't show signs of improvement the push higher will reverse or at the very least start to slow? Regardless of what we think the S&P should be doing the chart is bullish.
S&P levels to watch:
The S&P trades above its 20, 50 & 100 sma on 4 hour chart, a bullish chart.
Immediate resistance can be seen at 3082 a psychologically key level prior to the coronavirus crisis March 5th high, prior to 3130 (high 4th March).
Support can be seen at 2984 (yesterday low) 2906 (low 22nd May) and 2760 (low 14th May).
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.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital 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), GAIN Capital Singapore 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 GAIN Capital Singapore 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 GAIN Capital Singapore 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.
GAIN Capital Singapore 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 cityindex.com.sg for the complete Risk Disclosure Statement.
Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.