E-mini S&P 500 Index (ES) Futures Technical Analysis – Expected to Open Better on Strength of Global Indexes

The U.S. stock market was closed on Monday for Presidents’ Day, but on Friday, the S&P 500 Index set a record closing high as investors bought energy, financial and materials shares and sold big tech stocks in anticipation of new fiscal aid from Washington to help the U.S. economy recover.

The index traded mostly sideways throughout the week as investors rotated out of growth-oriented stocks that have dominated an almost year-long rally and bought cyclical and underpriced value stocks.

In the cash market on Friday, the benchmark S&P 500 Index settled at 3934.83, up 18.45 or +0.47%. In the futures market, the E-mini S&P 500 Index finished at 3931.00, up 19.00 or +0.48%.

The S&P energy, financials and materials sectors rose on expectations they will benefit from a reopened economy, while heavyweights Apple Inc, Tesla Inc and Microsoft Corp were lower most of the session. All three closed higher in a late market surge.

Value and cyclicals outperform in a rising interest rate, higher-growth environment, which the U.S. economy is on the cusp of entering, said Thomas Hayes, chairman and managing member of hedge fund Great Hill Capital LLC in New York.

“We’re under-estimating the lag effect of all the money in the system as more and more vaccinations are delivered and as more of the country reopens” from business shutdowns, he said.

“We are continuing this rotation that would be consistent with the new business cycle, and as (bond) yields go up, value and cyclicals will lead,” Hayes said.

In other news, the S&P 500 posted 52 new 52-week highs and no new lows.

Short-Term Outlook

The futures market closed at 17:00 on Monday with the E-mini S&P 500 Index settled at 3950.50, up 19.50 or +0.50%. When the futures market reopens on Tuesday, investors are going to have to decide whether to chase the market higher or play for a pullback into Friday’s close.