E-mini S&P 500 Index Bears Targeting January Low at 4212.75

March E-mini S&P 500 Index futures tumbled on Monday after Russian President Vladimir Putin recognized two breakaway regions in eastern Ukraine, increasing concerns about a major war. Volume was on the light side and the U.S. cash stock markets were closed on Monday for the Presidents Day holiday.

On Monday, March E-mini S&P 500 Index futures settled at 4289.50, down 54.00 or -1.26%. On Friday, the S&P 500 Trust ETF (SPY) settled at $434.26, down $2.80 or -0.64%.

U.S. equity markets have been under pressure in recent weeks as rising inflation has put the Federal Reserve on a path to tightening its monetary policy, likely to begin at its March meeting, while simmering tensions in Ukraine have grown.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 4212.75 will reaffirm the downtrend. A move through 4484.50 will change the main trend to up.

Short-Term Outlook

The direction of the March E-mini S&P 500 Index futures contract on Tuesday is likely to be determined by trader reaction to the Fibonacci level at 4327.50.

Bearish Scenario

A sustained move under 4327.50 will indicate the presence of sellers. The first downside target is a major 50% level at 4266.00, followed by a minor bottom at 4263.25.

If 4263.25 fails as support then look for the selling to possibly extend into a main bottom at 4212.75. Taking out this level will reaffirm the downtrend. This could trigger a further break into a major Fibonacci level at 4137.50, followed closely by the June 18 main bottom at 4129.00.

Bullish Scenario

Overcoming and sustaining a rally over 4327.50 will signal the presence of buyers. If this move creates enough upside momentum then look for the short-covering rally to possibly extend into a 50% level at 4419.50. This is the last potential resistance level before the 4484.50 main top.