04/24/2021 | by Brad Ritter

Market Update Into 4/26: Stocks Rebound After Realizing Capital Gains Tax Hike Priced in With Biden’s 2020 Win

BlogPrepare for the Trading WeekMarket Update Into 4/26: Stocks Rebound After Realizing Capital Gains Tax Hike Priced in With Biden’s 2020 Win

Stocks sold off early in the week on an announcement that the Biden administration plans to increase the capital gains tax rate to almost 39.6% from 20% at present. However, Friday’s session seemed to shake this off with most indexes closing close to all-time highs or regaining losses from earlier in the week.

If we take a look at historical market data, we will be surprised to know that increases in the capital gains tax rate has had very little effect on the market; with the last two increases resulting in double digital gains over the following six months. However, past history is no guarantee that it will be the same with this tax rate hike which is moving the US closer to rates seen in many European nations. This week’s charts posted by TrendSpider’s Chief Market Analyst, Jake Wujastyk, may shed some light on the direction the markets might be heading over the next few weeks to months.

In this blog post, make sure to check out the top 5 TrendSpider charts posted this week on social media; as well as the broad market charts into next week! If you missed Season 3 of The Stock Trading Pit, catch the recaps of every episode on our YouTube Channel.

Weekly Analysis

The $SPY closed the session at $416.25 (-0.12%) bouncing off the March pivot point on the Anchored Volume by Price and the Anchored VWAP from the breakout on April 1st on the daily chart. However, price is still working its way to the pinnacle of an ascending triangle on the weekly which is something to keep an eye on for resolution.

$SPY session and weekly charts.

The $QQQ closed the session at $339.2 (-0.06%) firmly above high-volume nodes on the volume shelf. On the daily, we do see several gaps below the current price using TrendSpider’s Gap Snake Indicator which is something to keep in mind. Looking at the weekly with the Bollinger Bands, a target of $355 is still resting on the upper range of the band from the current price.

$QQQ session and weekly charts.