E-mini S&P 500 Index (ES) Futures Technical Analysis – Break Under 3032.25 Will Be First Sign of Weakness

December E-mini S&P 500 Index futures are trading sharply higher late Monday as investors reacted positively to strong earnings reports and progress on U.S.-China trade.  Stocks have gotten a boost from better-than-expected results since earnings season began about two weeks ago. Of the 206 S&P 500 companies that reported through Monday morning, 78% have topped analyst expectations, according to FactSet.

At 19:05 GMT, December E-mini S&P 500 Index futures are at 3039.00, up 18.75 or +0.62%.

Apple, UnitedHealth and J.P. Morgan Chase are among the stocks helping the S&P 500’s bid to fresh record highs. Apple shares are up more than 10% in October amid optimism around iPhone 11 sales. UnitedHealth has rallied 12.7% for the month through Friday’s close, while J.P. Morgan Chase has gained 7.1% amid expectations that interest rates have bottomed. Microsoft climbed 2% after snagging a $10 billion defense contract.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today after buyers took out the July 26 top at 3032.25. This took it to a new all-time high. There is no resistance. However, due to the prolonged rally in terms of price and time, traders should watch for a closing price reversal top. This chart pattern usually brings an end to this type of rally.

A pullback under the previous top at 3032.25 will be the first sign of weakness. Crossing to the weak side of Friday’s close at 3020.25 will put the index in a position to post a potentially bearish closing price reversal top.

Daily Technical Forecast

Based on the early price action and the current price at 3039.00, the direction of the December E-mini S&P 500 Index into the close on Monday is likely to be determined by trader reaction to Friday’s close at 3020.25.

Bullish Scenario

Although I’d like to see a sustained move over 3032.25 into the close, the most important level to watch is 3020.25.

There is no resistance at this time, but there is a target angle at 3073.75. Crossing to the strong side of this angle will put the index in an extremely bullish position.

Bearish Scenario

A late session break under 3032.25 will indicate the buying is getting weaker. Turning lower for the session under 3020.25 will indicate the selling is getting stronger. Closing under this level will form a closing price reversal top and this could lead to the start of a 2 to 3 day correction.