Bottom line: SPX500 long term structure continues to remain bearish until prices stay below the 3400 mark. Bulls have remained in control since March 23, 2020 as the counter trend rally gains momentum to breach 3100 levels.

Fundamental Outlook:

SPX500 managed to clock yet another day in the Green closing at 3122, a gain of +1.36%. Futures pushed through 3131 highs yesterday and are seen to be cooling off a bit now at 3112 mark. The NASDAQ inches closer to all-time highs indicating almost a V-Shaped recovery.

Optimism over Fed measures and a V-shaped economic recovery has led to the risk in Risk-Assets as investors continue to remain hopeful despite the rising tensions among the world’s largest economies US and China. Adding further are the rising protests in US over the killing of George Floyd.

NZDUSD managed to climb higher and push through 0.6443 levels yesterday, as the US Dollar continued to weaken against majors. With NFP to be out tomorrow, NZDUSD may continue higher as further 8 million jobs are expected to be lost in May. If the Reserve Bank of New Zealand decides to implement “negative interest rate policy”, NZDUSD may come under pressure, going forward.

USDJPY has risen sharply over the last few trading sessions and is back above the 109.00 mark. This was natural as the anti-risk Japanese Yen continues to loose against risk sentiment. This could easily reverse though, if COVID-19 infections burst over the next few days.

Technical Analysis:

SPX500 continues to surprise traders as it prints 3122 yesterday. The counter trend rally is expected to be into its last leg higher before a potential bearish reversal resumes. Bottom line is that SPX500 should stay below 3400 mark.

SPX500 had dropped from 3400 through 2200 as an impulse wave. This confirms that the indice still needs to print below 2200, to complete the structure. The counter trend rally has managed to reach fibonacci 0.786 retracement at 3122 levels. High probability remains for a bearish reversal around current price action.

Traders might be preparing to sell more around 3100/20 levels, with protective stop losses above 3400 mark and projected target towards 2200, going forward.

Prepared by

Harsh Japee, Technical Analyst.

SPX500 Chart

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