S&P 500 Drives Higher Amid Reopen Hopes

Given the weakness of WTI and Friday's likely terrible NFP release, the S&P 500 is in for more consolidation between 2930.00 and 2786.00.

Shain Vernier•Tuesday, May 5, 2020•2 min read

It’s been a positive open on Wall Street, with U.S. stocks running to the bull. At the halfway point of the session, the DJIA DOW (+359), S&P 500 SPX (+50), and NASDAQ (+168) are all deep into the green. Hopes for a swift global economic restart and a spike in crude oil are being credited for the move.

This morning brought a set of peripheral economic numbers to newswires. As has been the case since March 1, most of the figures were dreadful. However, there were two bright spots:

Event Actual Projected Previous

ISM Non-Manufacturing PMI (May) 41.8 36.8 52.5

IBD/TIPP Economic Optimism (MoM, May) 49.7 NA 47.8

While it’s true that these statistics are at very low levels, they did outperform relative benchmarks. At this point, it appears that optimism and the non-manufacturing sector are on the uptick. Is this the beginning of a broad-based COVID-19 recovery? Realistically, it’s too early to tell. But, with the U.S. economy coming back online, there is certainly a light at the end of the tunnel.

Thus far today, traders and investors have piled into stocks. Let’s dig into the S&P 500 daily technicals and see where things stand moving into midweek trade.

S&P 500 Rallies Toward Key Fibonacci Resistance Level

With June WTI crude oil futures closing in on $25.00, the June E-mini S&P 500 is up significantly. Values are driving above the 2800.00 psyche level and closing in on Fibonacci resistance.

In my book, there are two levels to watch for the June E-minis:

Resistance(1): 62% COVID-19 Selloff, 2930.00
Support(1): 50% COVID-19 Selloff, 2786.00

Overview: The June E-mini S&P 500 has entered consolidation between the 62% and 50% Fibonacci levels. This is a key area and will likely be the origin of a directional move. However, given the fickle nature of oil pricing and this week’s likely terrible Nonfarm Payrolls release, the fundamentals suggest more consolidation within the 2930.00 to 2786.00 range.

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ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.