E-mini S&P 500 Index (ES) Futures Technical Analysis – Getting Support from Plunge in Treasury Yields

September E-mini S&P 500 Index futures are edging higher shortly after the cash market opening on Thursday, but giving back most of those earlier gains following surprisingly weak U.S. economic data.

Nonetheless, the benchmark index could pick up strength throughout the session due to a steep drop in U.S. Treasury yields. Such a move is typically bullish for growth stocks, and particularly the technology sector.

At 14:05 GMT, September E-mini S&P 500 Index futures are trading 3789.25, up 26.50 or +0.70%. The S&P 500 Trust ETF (SPY) is at $377.20, up $2.81 or +0.75%.

US Flash Business Activity Reports Indicate Slowing Economy

U.S. business activity slowed considerably in June as high inflation and a decline in consumer confidence dampened demand across the board, resulting in a gauge of new orders contracting for the first time in nearly two years.

Flash Manufacturing PMI decreased to 52.4 from 57.0 in May. Economists polled by Reuters had forecast the index would slip to 56.0. The Flash Services Sector PMI dropped to a reading of 51.6 from 53.4 in May. Economists were looking for a slight rise to 53.9.

Treasury yields plunged after the reports were released at 13:45 GMT, giving stocks an intraday boost.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the June 17 closing price reversal bottom.

A trade through 4204.75 will change the main trend to up. A move through 3639.00 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The minor trend is also down. A trade through 3843.00 will change the minor trend to up. This will confirm the shift in momentum.

The minor range is 3843.00 to 3639.00. The index is trading on the strong side of its pivot at 3741.00, making it support.

The short-term range is 4204.75 to 3639.00. If the minor trend changes to up then its retracement zone at 3922.00 to 3988.75 will become the primary upside target.

Daily Swing Chart Technical Forecast

Trader reaction to 3749.50 is likely to determine the direction of the September E-mini S&P 500 Index into the close on Thursday.

Bullish Scenario

A sustained move over 3749.50 will signal the presence of buyers. Taking out Wednesday’s high at 3805.50 will indicate the buying is getting stronger. This could trigger an intraday surge into the minor top at 3843.00.

A trade through 3843.00 will change the minor trend to up. This could trigger an acceleration into the short-term retracement zone at 3922.00 to 3988.75. Look for new sellers on a test of this area.

Bearish Scenario

A sustained move under 3749.25 will indicate the presence of sellers. The first downside target is a minor pivot at 3722.25. If this fails then look for the selling to continue into the main bottom at 3639.00, followed by the February 1, 2021 main bottom at 3614.75.