Stocks rebound ahead of the Fed, but risks just stay lower

Intermediate
  • After the global “risk off” shift due to the spread of the coronavirus Friday-Monday, a strong “risk on” rebound was seen across asset classes Tuesday.
  • This was partially driven by position squaring into the Federal Reserve interest rate announcement today, plus hopes that the coronavirus may not be spreading as quickly as feared, alongside talk of a vaccination in development.
  • Also, US earnings season saw very positive results across various companies on Tuesday, with Apple (AAPL) the standout, significantly exceeding expectations.
  • However, the damage inflicted by the global “risk off” moves Friday-Monday, leaves the threat for renewed stock average weakness today and this week.
  • Here we spotlight the future on the broad, US benchmark index, the S&P 500.

S&P 500 E-Mini Future day trade outlook: Rebound, but looking back lower

A strong Tuesday recovery to reverse the Monday selloff and close the Sunday/Monday bear gap at 3269.75-80.5, BUT whilst capped at 3299.75, we look for a roll back lower with bear forces intact from the plunge below 3260.75 (to shift the intermediate-term outlook bearish), to r see risks to the downside into Wednesday.

  • We see a downside bias for 3273.0 and 3260/59; a break below aims for 3251.75 and 3241.75 maybe 3233.0.
  • But through 3299.75 aims for 3310/11 maybe for 3322.5.

S&P 500 E-Mini Future intermediate-term outlook

A late January plunge below the key 3260.75 level signalled an intermediate-term bearish shift.

Downside risks: We see bear trend to aim for 3181.0 and maybe 3116.25.

What changes this? Above 3337.5 shifts the intermediate-term view straight to a bull trend.

 

S&P 500 E-Mini Future Chart

SP 500 chart

Editor in chief

Steve Miley has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Market Chartist, the Editor-in...continued

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