S&P 500 bulls to fill the hourly wick and beyond, banking on stimulus

• Stimulus headlines are buoying the stock market as a Tuesday breakthrough is in anticipation.
• S&P 500 index’s bulls are waiting to pounce on good news.
• Third-quarter earnings season has gathered momentum.

US stocks on Wall Street climbed on Tuesday on growing optimism that talks among US lawmakers are progressing with respect to a COVID-19 stimulus package.

The latest is that House of Representatives Speaker Nancy Pelosi said she was optimistic Democrats could reach a deal with the White House.

In doing so, aid would be expected to be released as soon as next month, but an agreement would need to be tabled later on Tuesday.

Pelosi and Treasury Secretary Steven Mnuchin will also talk at 3 p.m. ET (1900 GMT).

However, there is a large gap between $1.8 trillion and $2.3 trillion and there has been volatility on the session pertaining to mix messages and headlines on the likelihood of a deal being realistically agreed today.

With only two weeks left until Election Day, the pressure is on. 

Third-quarter earnings season picking up

Meanwhile, the third-quarter earnings season is truly upon us and has gathered momentum.

Of the 66 S&P 500 companies that have reported results, 86.4% have topped expectations for earnings, according to Refinitiv IBES data.

Property and casualty insurer Travelers Cos Inc TRV added 4.9% as it beat quarterly profit expectations.

Procter & Gamble Co PG adds 0.6% as it raised its full-year sales and earnings forecasts while Netflix Inc NFLX was flat ahead of its third-quarter earnings report.

In mid-afternoon trading, the Dow Jones Industrial Average was higher by 285.28 points, or 1.01%, to 28,480.7, the S&P 500 SPX was adding 38.65 points, or 1.13%, to 3,465.57 and the Nasdaq Composite added 114.73 points, or 1%, to 11,593.61.

Looking ahead for the closing hour

All ears to the ground for Pelosi and Treasury Secretary Steven Mnuchin talks from 3 p.m. ET (1900 GMT).

If there is a switch in sentiment between now and the close, there will be subsequent price action.

As it stands, the markets are banking on a breakthrough and this offers a bullish bias for the S&P 500 index. 

Bullish case for S&P 500

The index has formed a triple bottom on the 15-min time frame and has subsequently rallied in the afternoon, breaking resistances towards a near term 3485 target. 

The latest correction has completed a 61,8% Fibonacci retracement to the prior resistance structure which is expected to hold. In doing so, a continuation to the target can be expected to fill the hourly wick.

Hourly wick to be filled

Beyond the immediate target, (Target 1), there are higher levels to play for as follows: