The S&P 500 index has gained 5.22% since the U.S. elections, forming new all-time highs with positive economic data and strong earnings which fueled the surge in stocks.
U.S. stocks ended Wednesday’s trading session mixed, despite positive economic data showing that the core PCE Index rose by 0.3%, as predicted by analysts, and that initial jobless claims stayed steady at 213,000, demonstrating the job market’s strength. In accordance with analyst consensus, the GDP Growth Rate was 2.8% according to the second estimate of the third-quarter GDP Growth Rate report.
Traders and investors are also concerned over the outlook for interest rates after a batch of strong data showed resilience in the economy. Sentiment was in a poor mood caused by the closely watched inflation gauge that is preferred by the Federal Reserve.
The Fed’s November minutes, which was made public on Tuesday, revealed that policymakers were unsure of the prospects for interest rate reductions and the extent to which the current rates were limiting the economy.
Traders added to bets the Fed will lower borrowing costs by 25 basis points at its December meeting, according to CME’s FedWatch. However, they anticipate the Fed leaving rates unchanged at its January and March meetings.
Financial markets were still digesting the impact of President-elect Donald Trump’s pledge on Monday to impose duties of 25% on imports from Mexico and Canada and 10% on Chinese goods unless they halt flows of the deadly opioid fentanyl and illegal migrants into the U.S.
Technical Analysis
Source: TradingView
Price rallied after it formed a low at 5,856 and surged above the pivot point, reaching the level of its previous high at 6,025 where resistance was formed. Price pulled back after reaching resistance.
The RSI 14-day period shows a bearish divergence has formed which could be a bearish indicator. Traders will be watching for any potential fall back to the pivot point which can be considered as support around 5,930.
If bulls can control the pullback, traders will be looking to see if price breaches resistance and moves above its previous high.
