S&P 500 Strongly Ends Week Despite More States Going into Lockdown

• The S&P 500 ends the week strong and above Wednesday’s high of 3576, despite news that more states will enter lockdown.
• Other than the psychological level of 3600, there are no significant resistance areas separating the index from its all-time high at 3668.

The S&P 500 closed Friday’s session with gains of 1.3% or almost 50 points at 3585, with the index managing to recover all of Thursday’s losses and some trading above Wednesday’s highs of 3776.

S&P 500 Stable as US Falls Again

Since the opening of US cash equities, the S&P 500 has traded on a strong positive bias despite an increased flow of negative news about the state of the Covid-19 pandemic in the US. .and more evidence that the country is returning to the blockade.

Most recently, the governor of New Mexico announced that all citizens will have to shelter in place starting Monday and that all non-essential businesses must close. Meanwhile, the governor of the state of Oregon is reported to order a two-week “freeze” for the entire state. Additionally, the New York governor said that the governors of six northeastern states will hold an emergency meeting to address the recent ongoing spike in Covid-19 cases. Finally, California, Oregon, and Washington issued public notices to avoid all nonessential travel in or out of their states.

In that vein, the latest daily Covid-19 numbers released earlier during the US session found a staggering 194,000 cases of the virus in the past 24 hours, a jump of more than 50,000 in one day. Meanwhile, daily deaths have dropped to just over 1,100, but most expect the daily death count to soon rise above 2,000, following the recent spike in new infections.

But US equity markets are choosing for now to analyze the short-term risks of the economic outlook; Monday’s news from Pfizer and BioNtech on the success of their vaccine in preventing Covid-19 infection, which many analysts and institutions see as a turning point in the fight against the virus, have maintained sentiment, in its most of it propped up.

It is true that the Pfizer / BioNtech vaccine must be stored at sub-zero temperatures, which complicates distribution logistics. However, markets appear to have significantly revised their expectations of a global return to normal after the successful mass vaccination of the majority of the world’s population, perhaps in anticipation of good news regarding the efficacy of other vaccine candidates (such as the being developed by AstraZeneca / Oxford University, which only needs refrigeration).

Also notable today was the fact that the US equity markets have rallied in unison. The Nasdaq 100 underperformed earlier in the week amid weakness in tech names that have benefited from the lockdown (now the assumption that Monday’s vaccine news brings a “return to normal” earlier). The Nasdaq 100 closed with gains of approximately 1.0% and the Dow Jones with gains of 1.4%.

S&P 500 expects a move to record highs above 3,600

On the bright side, there are very few significant levels of resistance separating the S&P 500 from its all-time high, set Monday in the wake of the Pfizer / BioNtech vaccine announcement, at 3,668.

With equity markets seemingly focused more on the longer-term positives – earlier-than-expected mass vaccinations and global economic reopening and a move toward more favorable global trading conditions under a less protectionist Biden administration – the continued rise seems likely. can continue in the next week. For the S&P 500, the next immediate hurdle to the upside is the 3600 level.

On the downside, significant buying interest has been seen this week around 3510-3520 and this is likely to remain the case. Other levels on the downside are the 21-day moving average (DMA) at 3,437 and the 50-day DMA at the psychological level of 3,400.