E-mini S&P 500 Index Closes Inside Key Retracement Zone

June E-mini S&P 500 Index futures ended lower in choppy trading on Friday, as beaten-down bank shares gained, while technology stocks gave back all of their gains from the previous session. Worries over how best to deal with an economy that could skid as the Federal Reserve moves to aggressively tackle inflation weighed on the benchmark index.

On Friday, June E-mini S&P 500 Index futures settled at 4483.50, down 12.75 or -0.28%. The S&P 500 Trust ETF (SPY) finished at $447.62, down $1.15 or -0.26%.

A jump in the yield on the benchmark 10-year U.S. Treasury note to a three-year high of 2.73% helped boost the S&P banking index by 1.18%, after slumping to 13-month lows on Thursday. The index is down 10.8% year to date.

The big rate-sensitive lenders all rose, with JPMorgan Chase &Co gaining 1.8%, Bank of America Corp 0.7%, Citigroup Inc 1.7% and Goldman Sachs Group Inc 2.3%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 4444.50 will signal a resumption of the downtrend. A move through 4588.75 will change the main trend to up.

The main range is 4800.00 to 4094.25. The index settled inside its retracement zone at 4447.00 to 4530.50. This zone is controlling the near-term direction of the index.

The short-term range is 4094.25 to 4631.00. Its retracement zone at 4362.50 to 4299.25 is the primary downside target area.

Short-Term Outlook

The direction of the June E-mini S&P 500 Index early Monday is likely to be determined by trader reaction to 4494.25.

Bearish Scenario

A sustained move under 4494.25 will indicate the presence of sellers. If this move creates enough downside momentum then look for a test of the main 50% level at 4447.00, followed by last week’s low at 4444.50.

Taking out 4444.50 with strong selling pressure could trigger an acceleration to the downside with 4362.50 to 4299.25 the next major target. Watch for aggressive counter-trend buyers to show up on a test of this area.

Bullish Scenario

A sustained move over 4494.25 will signal the presence of buyers. If this generates enough upside momentum then look for a surge into the resistance cluster at 4530.50 – 4537.75. Since the main trend is down, sellers could come in on the first test of this area.

Overtaking 4537.75 will indicate the buying is getting stronger with the main top at 4588.75 the next likely target price.