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The S&P 500 finished lower on Thursday, giving back a good chunk of the gains seen on Wednesday, after the Federal Reserve adjusted its stance on interest rates.
The Federal Reserve hinted that economic data is currently not strong enough to allow the raising of rates, giving traders more reason to invest in riskier assets. However, some of those gains were reversed on Thursday as the S&P 500 sank by -0.49% on the day.
The Index was a sea of red with most shares finishing the session in negative territory. The one green spot was the healthcare sector, which edged higher, driven by gains in large pharmaceutical company Merck Inc. Shares in Merck gained at least 1% after encouraging reports from a study of its drug prospect, Vytorin.
There were major moves seen in the after hours market too as shares in Nike rallied over 4% after the markets closed. Earlier in the day, the sports retailer had released promising revenue and earning numbers, with Q3 revenue up 7%.
Elsewhere in stocks, it was announced that multinational credit card company behemoth, Visa Inc., is to split its stock by a factor of 4 to 1. The company also announced plans to buy back $5 billion in company stock.
Technicals & Outlook
It was not an easy day to trade the S&P 500 from a technical point of view as the index opened in no man’s land and touched no major level apart from the main pivot point.
Most technical indicators are mixed right now on the daily chart but we see a better risk/reward profile in being long. On the 120-min chart most indicators are bullish. As a result, we are looking to buy within the 2,039.5 – 2,080 range with a price target of 2,125 over the next few days. Stops can be held below 2,039.5 and we see a ‘medium’ chance of a trend reversal near 2130 as the current rally is the fifth wave in the sequence.
Thierry Laduguie is Trading Strategist at www.bettertrader.co.uk
