E-mini S&P 500 Index (ES) Futures Technical Analysis – Falling Yields Driving Strong Upside Momentum

June E-mini S&P 500 Index futures hit a record high on Thursday, as Treasury yields weakened following softer-than-anticipated labor market data and helped lift technology and other growth stocks.

Weekly initial jobless claims data showed a second straight rise, conflicting with the recent payrolls report, and buttressed the Federal Reserve’s dovish policy stance to keep interest rates lower for a substantial period.

At 04:23 GMT, June E-mini S&P 500 Index futures are trading 4095.25, up 6.25 or +0.15%.

The softer data helped yields on the benchmark 10-year U.S. Treasury note fall as low as 1.628% for a second straight day as it continues to back away from a 14-month high of 1.776% hit in late March.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed during the pre-market session on Friday when buyers took out the previous high.

The new minor range is 3843.25 to 4102.50. Its retracement zone at 3972.75 to 3942.75 is the nearest support. This zone will move up as the market moves higher.

Daily Swing Chart Technical Forecast

Essentially, we’re looking at a classic war between momentum traders and value investors. The momentum traders are winning this battle because they are being driven by falling yields. Should rates stabilize or edge higher, the momentum will stop and investors will start looking for value.

The direction of the June E-mini S&P 500 Index futures contract on Friday will be determined by trader reaction to 4089.00.

Bullish Scenario

A sustained move over 4089.00 will indicate the presence of buyers. Taking out the intraday high at 4102.50 will indicate the buying is getting stronger. There is no resistance so we could see another acceleration to the upside.

Bearish Scenario

A sustained move under 4089.00 will signal the presence of sellers. This won’t change the main trend to down, but it will shift momentum to the downside and this could trigger the start of a 2 to 3 day correction.