Wall Street closes higher and above a key support level at the end of a tough week

After a volatile week, the S&P 500 closes 1.73% higher and 0.77% in the black on Friday.
There is a key support/resistance level at 3,159.50 that the price closed above.

S&P 500 line chart

It has been an interesting week for equities as some traders and investors remain unhappy that the US administration cannot agree on the latest coronavirus stimulus bill. Elsewhere the US and China situation has not really escalated as the war of words cooled down. The saving grace was the FAANG stocks earnings releases, Amazon, Apple, Alphabet and Facebook all beat estimates. L Brands was the big winner as the company plans to cut annual costs by USD 400 million going forward. This is a crucial move considering it’s facing a steep drop in revenue from disruptions caused by the COVID-19 pandemic. Shares rose 27.15%.

Looking at the chart below, the price is holding above a key previous wave high at the red horizontal line. There has been a lower high created this week but the price will only creat a lower high lower low pattern if 3,209.86 breaks to the downside. On the topside, the green line just below 3,300 is very important next week. If the resistance breaks the trend will be back in full swing and if the COVID package gets signed off on the weekend there could be a gap higher on Monday.

The indicators are looking very mixed. The Relative Strength Index is looking weak as it hangs below the 50 area. The MACD histogram is turning red but the signal lines are above the zero line for now which is not conclusive at all. Overall, this is still an uptrend the market is a short term consolidation phase and next week there could be an important break, so keep an eye on these levels.