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The S&P 500 Index climbed by 0.47% on Wednesday, outperforming other benchmark indices as crude oil futures gained and US Treasuries fell.
A stirring State of the Union address from President Obama caught investors in an optimistic mood and strong earnings numbers from some US tech companies also boosted markets.
Meanwhile, anticipation of a dovish ECB meeting on Thursday saw gains in Europe and meant many traders were reluctant to sell risky assets.
The euro pared gains and European markets climbed as speculation grew that the ECB would boost monetary stimulus to the tune of $1.28 billion. ECB policy makers are currently fighting deflationary forces with new policy measures likely to start as soon as March 1st.
Earnings
US earnings numbers also helped boost stock market indices with online auction site Ebay climbing over 2% on the back of job cut reports. Meanwhile, Netflix Inc. jumped 17% after the company reported a better-than-expected influx of international subscribers. International users of the movie streaming service grew by 2.43 million, a record for the business.
Technicals & Outlook
The S&P 500 Index was actually looking at some mild losses in the early morning session as stocks in Asia fluctuated.
However, a strong finish in Europe and a positive opening in the US, saw the market reverse off an intraday low around 2,011. The market kept pushing higher and closed near enough to the first resistance around the 2,032 level. However, given the bullish news with regard to the ECB new QE program, it would appear that US investors are not buying the rumour.
Looking ahead, the S&P 500 is now in relatively neutral territory, having moved away from it’s recent downward trend. It is clearly underperforming the FTSE 100 as shown by the declining relative strength line at the bottom of the chart.
We note that indicators are mixed over the next few days but we take a bullish bias and look to buy between the 1,988 – 2,005 range as there is potential for higher prices today and tomorrow.
But the overall pattern is bearish, further out, we are significantly more bearish and now see potential for a downward move to the 1,940 level in the next few weeks.
Thierry Laduguie is Trading Strategist at www.bettertrader.co.uk
