Following a week-long, post-election rally, U.S. index futures extended their gains on news that a vaccine developed by Pfizer Inc (NYSE: PFE) and BioNTech SE (NASDAQ: BNTX) was more than 90% effective in preventing cases of the COVID-19 coronavirus. The response resulted in the upside break of a multi-month balance area.
As of now, on relatively poor structure, the S&P 500 index future is trading above the September and October rally high. Given the size of the advance, index products are extended and the odds of digestion, either through time or price, have increased substantially.
Furthermore, the aforementioned multi-month balance-break is a strongly bullish signal to be confirmed by acceptance above the September peak. That means, if prices spend time trading outside of the balance area, then the odds of a continuation to new highs increase substantially. If responsive participants were to auction prices back into the balance area, then odds favor rotational trade as low as the $3,200 boundary.
Levels of interest below current trade include the high-volume areas at $3,540, $3,500, $3445, and $3,400. Major upside references include the extension at $3,700 and projection at $3,800.