Stocks Rally As Stimulus Hopes Fade
Fresh bids are hitting the U.S. equities markets this morning, despite stimulus doubts. At the midway point of the Wall Street session, the DJIA DOW (+209), S&P 500 SPX (+32), and NASDAQ (+144) are all in the green. The sentiment is clearly “risk-on” as progress regarding COVID-19 stimulus package number two has ground to a halt.
Lawmakers on Capitol Hill are presently exchanging jabs over proposed COVID-19 relief measures. In the past 24 hours, both House Speaker Pelosi and Senate Majority leader McConnell weighed in on the issues of stimulus and stand-alone relief bills:
- Pelosi: “There is no stand-alone bill without a bigger bill. There is no bill.”
- McConnell: “I’d like to see us rise above and do what we did back in March and April, but I think that’s unlikely in the next three weeks.”
Of course, it’s important to remember that in politics, anything is possible. Breaking headlines allude to Trump raising his stimulus offer to $1.8 trillion, up from $1.6 trillion. According to “sources,” Trump has already approved a revised stimulus package. Ultimately, only time will tell how the political jousting shakes out.
Stimulus Doubtful, Stocks Rally Despite The News
December E-mini S&P 500 futures are on the bull, driving toward the 3500.00 psyche level. Currently, U.S. stocks are on track for their best week since August.
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As we roll into next week’s trade, there will be one level on my radar:
- Resistance(1): 78% Macro Wave Retracement, 3493.00
Bottom Line: If a Congressional stimulus plan takes shape, then stocks are likely headed higher. Until elected, I’ll have sell orders in the December E-mini S&P 500 queued up from 3492.75. With an initial stop loss at 3496.75, this trade produces 16 ticks on a standard 1:1 risk vs reward ratio.
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