E-mini S&P 500 Index (ES) Futures Technical Analysis – September 29, 2016 Forecast

December E-mini S&P 500 Index futures are trading higher after Wednesday’s late session surge was triggered by a huge rally in crude oil futures. This move drove up the energy sector which makes up a large portion of the S&P Index.

That being said, today’s price action will be dictated by the momentum created by yesterday’s move. Buyers are either going to come in and drive the market higher in response to oil’s big gains, or they are going to back away as the index approaches a pair of main tops.

It’s not all about oil. It’s about the election and the next Fed rate hike. Sure it was a nice move in oil, but it was triggered by short-covering after the hedge funds were caught off-guard following a last minute decision by OPEC to make the deal. Furthermore, we don’t even know all the details except that the agreement is likely to be finalized at the next OPEC meeting in late November.

Putting it all in a timeline, I think that investors will be putting a lot more weight into the outcome of the election before they start to become overly concerned about oil prices. Additionally, we still have a Non-Farm Payrolls report to worry about next week and remember Yellen said the Fed is watching the strength in the labor market.

TECHNICAL ANALYSIS

The main trend is down according to the daily swing chart. However, momentum is up and the market is in a position to take out the last main top at 2172.75. This will turn the main trend to up. It may even create enough upside momentum to continue on to the next main top at 2182.75.

Taking out the top at 2172.75 and failing to follow-through to the upside on increasing volume, or a break back below the breakout price will signal that the buying is weak or stop driven.

FORECAST

BASED ON THE CURRENT PRICE AT 2166.50 (0931 GMT), THE DIRECTION OF THE INDEX THE REST OF THE SESSION IS LIKLEY TO BE DETERMINED BY TRADER REACTION TO THE DOWNTRENDING ANGLE AT 2167.75. THIS IS THE LAST POTENTIAL RESISTANCE ANGLE BEFORE THE 2172.75 MAIN TOP.

A SUSTAINED MOVE OVER 2167.75 WILL INDICATE THE PRESENCE OF BUYERS. THIS COULD GENERATE ENOUGH UPSIDE MOMENTUM TO TAKE OUT THE 2172.75 MAIN TOP, CHANGE THE TREND TO UP AND FUEL A RALLY INTO THE NEXT DOWNTRENDING ANGLE AT 2175.25. THIS IS THE LAST POTENTIAL RESISTANCE ANGLE BEFORE THE 2182.75 MAIN TOP.

THE INABILITY TO OVERCOME 2167.75 WILL SIGNAL THE PRESENCE OF SELLERS. THE DAILY CHART INDICATES THERE IS ROOM TO THE DOWNSIDE. IF THE SELLING INCREASES ON THIS MOVE THEN LOOK FOR THE BREAK TO EXTEND INTO A CLUSTER OF LEVELS AT 2152.75, 2152.25 AND 2148.75.

WATCH THE PRICE ACTION AND READ THE ORDER FLOW AT 2167.75 TODAY. TRADER REACTION TO THIS ANGLE WILL TELL US IF THE BUYING IS GETTING STRONGER, OR IF SELLERS ARE REGAINING CONTROL.