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S&P 500 Within Striking Distance Of All-Time Highs

It’s been a big day for U.S. stocks, led by a run at all-time highs in the S&P 500 SPX. Values are driving north of 3300.00 and approaching the pre-COVID-19 levels of last February. For now, the market drivers are a bit obscure. A second round of COVID-19 stimulus payments appears to be in doubt, U.S./China relations are becoming even more frayed, and COVID-19 infection rates are on the rise. While today’s action is strong, it’s a challenge to figure out what exactly is driving the positive sentiment. 

On the commodity front,  WTI crude oil is showing strength above $42.50. At least some of the good cheer may be attributed to another drop in U.S. oil supplies. Earlier, the EIA reported a drop of -4.512 million barrels, the third major decrease in a row. This is not uncommon for the summer driving season as the demand for refined fuels is robust. Ultimately, we’ll see how long the strength lasts ― Labor Day weekend is under a month away, marking the unofficial end of the summer vacation season.

Bidders are in firm control of the S&P 500, sending the market some 1.20% higher for the session. Let’s dig into the weekly technicals for the September E-mini S&P 500 and see where this market stands.

S&P 500 On The Doorstep Of February’s Highs

Below is a weekly chart of the September E-mini S&P 500 as of Tuesday’s close. As you can see, the all-time high of 3396.50 was in line for a test. The weekly bullish trend remains valid and a late-summer rally appears to be a foregone conclusion for U.S. stocks.

September E-mini S&P 500 (ES), Weekly Chart
September E-mini S&P 500 (ES), Weekly Chart

Overview: As we head toward mid-August trade, COVID-19 news is taking a backseat to inflationary pricing. This week has brought us exploding COVID-19 infection rates as well as a spike in inflation. Thus far, investors have chosen to get out in front of inflation instead of limiting exposure due to COVID-19. While a viable vaccine appears to be a ways off, it looks like the markets are already pricing an end to the pandemic’s economic reach.

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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.
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