U.S. Stocks Patiently Awaiting Stimulus - Forex News by FX Leaders

U.S. Stocks Patiently Awaiting Stimulus

Posted Monday, October 19, 2020 by
Shain Vernier • 2 min read

Once again, negotiations over COVID-19 stimulus are dominating U.S. stock market sentiment. At the halfway point of the Wall Street session, the DJIA DOW (-85), S&P 500 SPX (-15), and NASDAQ (-45) are hovering near flat. Statements from Congressional leadership suggest that a deal will come in the next 48-hours or not until after the election.

To say that COVID-19 stimulus package number two has been “fiercely contested” is an understatement. A Sunday tweet from Speaker of the House Nancy Pelosi sums up the Democrat’s position:

“The Trump Administration must negotiate in good faith. They told us they would put a light touch on our most recent proposal for testing & tracing. Instead, they took a chainsaw to the proposal, cutting more than half our proposal.”

Pelosi’s comments are in reference to the earlier $2.2 trillion Democrat plan that gained approval in the House of Representatives. In an attempt to put pressure on Republican leadership, Pelosi placed a 48-hour deadline on negotiations.

Ultimately, Pelosi’s deadline doesn’t mean much. If Congressional leadership can craft a deal, then it will likely be quickly signed into law by President Trump. If not, more haggling will be in the cards ahead of 1 January 2021. At this point, the markets expect some form of stimulus ― the only real question is when.

Stimulus Up In The Air, NASDAQ Enters Rotation

At press time, December E-mini NASDAQ futures are in danger of posting a fifth-straight losing session. The weakness has come amid the stimulus standoff on Capitol Hill.

December E-mini NASDAQ Futures (NQ), Daily Chart

Here are the key levels to watch as the week progresses:

  • Resistance(1): All-Time High, 12,444.75
  • Support(1): 62% Current Wave, 11,429.00

Overview: Right now, the muted action in U.S. stocks is all about the passage of a second stimulus package. If a sweeping agreement does come to pass in the next day or two, be ready for the American equities indices to mount serious charges at fresh all-time highs.

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About the author

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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