Congress Reaches COVID-19 Aid Agreement, Markets Rally
A final COVID-19 stimulus bill is very likely to be ratified later today in Congress. If not, it’s back to the drawing board.
Partisan politics is the story of the day as Congress struggles to sign off on a COVID-19 stimulus bill. This marks the third straight trading session dominated by media buzz over the passage of a government stimulus. Wall Street believes that an aid package will become a reality very soon, with the DJIA DOW (+1088), S&P 500 SPX (+91), and NASDAQ (+153) trending higher.
At this hour (1:15 PM EST), a deal has been announced between the White House and Senate. Speaker of the House of Representatives Nancy Pelosi has offered a “tepid endorsement,” to the deal. Ultimately, this development suggests that a final bill is very likely to be ratified later today. If not, it’s back to the drawing board ― a politically risky move with many members of Congress up for re-election in November.
Congress Plays Politics As The DJIA Trends Higher
The Dow Jones Industrial Average (DJIA) is trending north for the second consecutive day. For June E-mini DOW futures, prices are challenging a key 38% Fibonacci retracement level. If taken out, we may begin to consider the possibility of the COVID-19 panic bottom being in for U.S. equities.
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Right now, there are a few levels on my radar for this market:
- Resistance(1): 38% Retracement, 21,477
- Resistance(2): Bollinger MP, 23,096
- Support(1): Spike Low, 18,086
Overview: For the time being, it’s all about the 38% Fibonacci resistance level in the June E-mini DOW. This area is under assault; if it holds after the stimulus bill is passed by Congress, then look out below.
On a side note, it is important to remember that today’s strong showing for the DOW is tied largely to the performance of Boeing stock (BA). Boeing is up more than 30% on the session; the robust gains have been a primary catalyst for the rally in the DOW. Should the U.S. government’s stimulus package fail to deliver what’s expected, a rapid reversal will become extremely likely.
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