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  • The S&P 500 closed 0.43% higher while the Dow rose 0.50%.
  • The Nasdaq was once again the outperformer rising 0.74%.

Equities are trading higher again as PMI data beat expectations and the market digests Trump’s words which could defuse tensions with China. The PMI data was interesting and for all the ranting and raving about the positive data if you take a closer look all may not be what as it seems. The report stated:

“New business across the private sector declined further in June, albeit at only a marginal pace. Despite many firms noting a rebound in client demand, some stated that renewals and requests for new business were historically muted.” 

There was still more negative notes from the report as it stated new business orders from abroad were still muted and there could still be more cuts to the American workforce in the coming months. In the summary section of the report, the IHS Cheif Economist stated:

However, although brief, the downturn has been fiercer than anything seen previously, leaving a deep scar which will take a long time to heal. We anticipate that the US economy will contract by just over 8% in 2020. The coming months will therefore see the focus turn to just how much recovery momentum the economy can muster to recoup this lost output

American Airlines was once again at the bottom of the S&P 500 list after the firm priced its latest share offering at USD 13.50 a share. That is a discount of nearly 10% to Monday’s closing price. Not only that, but the company also made the decision to increase its size of the offering to USD 2 billion from USD 1.5 billion.

The top of the index was also full of travel names as some of them recovered. Trip Advisor, Norwegian Cruise Line’s and Royal Caribbean Cruises all rose over 4%. Gains in the tech sector were still more impressive as the Nasdaq once again hit all-time highs.

The indices look to be aligning with their recent upward trend on Tuesday and the VIX is still recovering from the spike seen on 16th March. This was when the index reached a high of 83.56 and now its index is moving to more normal levels. If the VIX is anything to go by it seems the bulls have won the battle in the equity markets. The fact that the price has printed below the low of two sessions ago at 30.40 is important. At the moment it seems the index has moved momentarily back up but the close will be important. 

S&P 500 1-hour chart

The S&P 500 index has been selling off into the close and the black resistance line at 3154.85 looks pretty hard to break. This could be the focus in tomorrows session so keep an eye there. Crucially, the price is standing above the 55 and 200 moving averages. Conversely, the MACD histogram has dipped below into the red but the signal lines are still holding above. The Relative Strength Index has just dipped below the 50 mild-line and this could be a bearish sign in the near term. Longer-term the market is still in a bull trend and 3233.13 is the wave high that bulls need to take out for the trend to keep moving in the right direction.

S&P 500 chart

Additional levels