Wall Street bulls take the lead as China is pushing free trade

• China’s President said that he would open its economy to free trade.
• The news alleviated tension to the US-China trade war and send stocks higher.

The three main US indices rallied on Tuesday as Chinese President Xi Jinping talked about pushing free trade. The S&P 500 rose 1.8% and closed at $2,656.87. The Dow Jones Industrial Average closed 428.90 points higher at $24,408 and the Nasdaq composite gained 1.7 % to $7,094.30.

At the Boao forum in China, Xi Jinping, the Chinese President, argued that China should “push for free trade.” His comments were constructive for global trade as he insisted that “China will not threaten others, will not undermine existing global order.” He also noted that China would “sharply widen access to market” and it will lower auto import tariffs. On the issue of intellectual property, he said China was ready to strengthen intellectual property protection. The news sent markets worldwide back in risk-on mode. US automakers stocks, Boeing and Caterpillar soared. Oil blasted higher 4% with Brent above $70 and testing yearly highs. Energy stocks jumped higher and Energy Select Sector SPDR Fund (XLE) shooted 3.3% up and registered its best daily gain since November 30, 2016. 

"If you look at President Xi's speech, it was conciliatory and that feels like a de-escalation. That's what the market wants. The problem is reform in China happens slowly" commented Art Hogan, chief market strategist at B. Riley FBR. 

Meanwhile, Facebook’CEO Mark Zukenberg is currently giving testimony to Senate committees regarding Cambridge Analytica which used Facebook data to influence US voters.  

S&P 500 Index 4-hour chart

Bulls have regained the 100-period simple moving average and are building bullish pressure. Resistance is seen at $2,672.50 swing high and then at $2,740 swing high on March 21. Support is lies at $2,600 demand level and $2,551.75 cyclical low. 

Dow Jones 4-hour chart

The Dow Jones is trading above its 50 and 100-period simple moving average. Resistance is seen at $24,626 and $24,992 swing highs. Support lies at $23,736 and $23,332 cyclical low. 

Nasdaq 4-hour chart

The Nasdaq has tested its 100-period simple moving average. It is trading right at a resistance level in the $6,600-$6,650 area. Further up, resistance is seen at $6,834 swing high. Support lies at the $6,398.5 swing low and $6,296 cyclical low.