E-mini S&P 500 Index (ES) Futures Technical Analysis – Inside Move Suggests Impending Volatility

June E-mini S&P 500 Index futures are trading slightly lower late in the session on Tuesday after clawing back most of its earlier losses. The benchmark index fell sharply early in the session as investors shed many heavyweight tech-related stocks and aggressively bought undervalued banks and industrial stocks amid a rise in U.S. bond yields.

At 19:09 GMT, June E-mini S&P 500 Index futures are trading 3955.75, down 3.25 or -0.08%.

Economy-linked financials and industrials were the only sectors in positive territory, while technology and utilities posted the steepest declines.

Bank stocks rebounded 1.7% as investors took heart from signs that the impact from the fall of a U.S. hedge fund didn’t ripple out to broader markets.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 3978.50 will signal a resumption of the uptrend and put the index at a record high. The main trend will change to down on a move through 3843.25.

The minor range is 3843.25 to 3971.25. Its 50% level at 3907.25 is the nearest support.

The short-term range is 3710.50 to 3978.50. Its 50% level at 3844.50 is another support area. It stopped the selling at 3843.25 on March 25.

Short-Term Outlook

Tuesday’s inside move suggests investor indecision and impending volatility. The S&P 500 Index rarely produces consecutive inside moves so we’re likely to see a breakout in either direction late Tuesday or early Wednesday.

Bullish Scenario

A sustained move over 3971.25 will indicate the presence of buyers. The first upside target is 3978.50. Taking out this level could trigger an acceleration to the upside.

Bearish Scenario

The inability to take out 3971.25 or follow-through on a breakout will be the first sign of weakness. A sustained move under 3933.75 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into 3907.25.