S&P 500 Clawing Toward 3,000 Milestone Finds Road Getting Harder

(Bloomberg) -- A rally this week has pushed the S&P 500 Index to 2,972. The 28-point road to 3,000 could be a slog.

Traders who look at charts to divine where assets are going see a band of resistance near 2,999, which represents the index’s 200-day moving average. That technical level proved insurmountable the last time it was approached in late April. The gauge capped gains Wednesday near its 100-day moving average.

For the S&P 500 to reach 3,000 and cling to the gains for at least some time, the rally needs to broaden out beyond the tech titans that have led the advance so far. Beaten-down consumer, real estate and financial stocks are higher since mid-March, for sure, but their gains haven’t yet caught up with high fliers like software and biotech companies or Netflix Inc., Amazon.com Inc. and Facebook Inc.

“As the S&P once again hesitates in proximity to the 200-day moving average (2,999), the ‘captains of the boat,’ dominated by FAANG concentration and shelter-in-place themes, do not appear to have sufficient energy to lead the market higher,” said Julian Emanuel, the chief equity and derivatives strategist at BTIG.

The S&P 500 rose 1.7% Wednesday as investors look toward economic reopenings and key earnings from the retail sector, the group that was among the hardest hit during the pandemic, showed signs of resiliency.

To Rich Ross, Evercore ISI’s managing director and head of technical strategy, timing plays an important role ahead of a three-way weekend. If stocks hold their position at 2,964, that could open the potential path to 3,200, Ross said. If not, stocks will go back to range-bound trading like what was seen during the past month.

To Nela Richardson, an investment strategist at Edward Jones, the rally is still fragile at a time when investors have little certainty on the outlook for the economy or a vaccine for the coronavirus.

“Any incremental headline that shows either progress or a step back, I think markets are going to respond to,” Richardson said. “There’s all this uncertainty, people are looking for certainty.”

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