Thursday's Market Minute: Stocks Rally As GDP Plummets

Equity indices made sharp gains this week as the bulls were emboldened by news of a possible coronavirus treatment from Gilead Sciences as well as earnings from giants like Microsoft Corporation MSFT, Facebook, Inc. FB Alphabet, Inc. GOOG GOOGL and Tesla, Inc. TSLA. But yesterday’s dismal -4.8% GDP print, delivered with promises of worse to come as COVID-19 continues to take its toll, casts doubt on the longevity of the rally.

The S&P 500 futures contract broke above last week’s top near 2880 with a 3.42% gain that closed near the highs, though it gave up ground in the overnight. The /ES once again finds itself near the 2950 level, which coincides with the tops from Oct. 2018 and Apr. 2019. Price action from here to 3000 will be important to watch, as it includes potential resistance at the confluence of the 50-day SMA and the yearly linear regression line near 2980. To the downside, traders could be eyeing support near the 252-day EMA around 2920.

Meanwhile, Gold futures seem to be taking a breather after advancing 19% since the mid-March lows. The /GC contract earlier this week saw a bearish MACD crossover that suggests slowing momentum as it trades in the thick of a volume node near 1730. The 1700 level will be the key price to hold for continued upside, while the coincidence of the previous highs and the Linear Regression 50% channel upper suggest headwinds near 1760.