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The S&P 500 recovery continues driven by improving economics. The index closed the week just below the 3138 resistance and Randy Frederick from Charles Schwab prefers to see a consolidation due to another sharp rise would bring a pullback.

Key quotes

“As I watched the market action this week, two old axioms kept coming to mind; ‘Don’t fight the Fed’, and ‘The trend is your friend’. Clearly the Fed (and Congress) have provided enormous monetary and fiscal support to keep the economy from collapsing under the weight of the COVID-19 virus, and that has resulted in a sustainable uptrend that just refuses to be derailed by bad news of any kind.”

“Following the strong June employment reports the S&P 500 attempted to break out of the recent consolidation zone that it has been in for the past 3 weeks. The index is below 8 points above the 3,138 resistance line.” 

“As I’ve said several times before, I’d prefer that S&P 500 consolidate a little longer because another sharp rise is likely to be followed by another pullback. For now however, downside support is likely still at the 200-day SMA (3,022).”