S&P 500

U.S. Indices Break Higher To Open The Week

Posted Monday, April 6, 2020 by
Shain Vernier • 2 min read

The trading week opened with a bang on Wall Street, with the U.S. indices going trend-day-up. Through the first half of the session, the DJIA DOW (+1200), S&P 500 SPX (+145), and NASDAQ (+415) are all deep into the green. At this point, it appears that many traders are betting that the worst of the coronavirus pandemic may be in the rearview mirror.

According to medical officials, the idea that the COVID-19 virus is weakening is incorrect. An ominous Sunday news cycle featured experts saying that this week will bring a “Pearl Harbor moment” to the United States. Thus far, the markets are ignoring these warnings. This morning’s short-term U.S. Treasuries auctions back up this claim:

Event                                         Actual      Previous

3-Month T-Bill Auction             0.125%       0.085%                

6-Month T-Bill Auction             0.16%          0.10%

Make no mistake, short-term yields are still extremely low. However, today’s uptick is in sync with the bullish action in the U.S. indices. Perhaps this week will bring the big recovery that long-term stock investors have been waiting for.

U.S. Indices Riding The Monday Morning Bull

For the June E-mini S&P 500, prices are poised to challenge the COVID-19 38% Fibonacci retracement level. If we see a strong daily close, recovery may come sooner than expected.

U.S. indices
June E-mini S&P 500 Futures (ES), Daily Chart

Here are the key levels to watch in this market for the near future:

  • Resistance(1): Bollinger MP, 2618.25
  • Resistance(2): 38% Retracement Of COVID-19 Sell-Off, 2641.50
  • Support(1): Daily SMA, 2509.00

Overview: Today’s close may tell the tale for the June E-mini S&P 500. In the event we see a steep sell-off, the bears are still very much in control of this market.

On the upside, the Daily SMA has crossed over the Bollinger MP for the first time since February 25. This is a key technical development and one that suggests that prices may be ready to shift direction. Ultimately, the coming week’s action is going to set the table for the rest of the spring for the U.S. indices.

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