E-mini S&P 500 Index (ES) Futures Technical Analysis – January 10, 2014 Forecast

March E-mini S&P 500 Index futures posted a volatile move after the release of the December U.S. Non-Farm Payrolls report before turning higher shortly ahead of the cash market opening. The jobs report was positive, but severely missed the pre-report estimate to the downside. Analysts were looking for an increase of 194K jobs; however, the report showed that only 74K jobs were added to the economy.

Although this report doesn’t mean the Fed will refrain from another reduction in stimulus in January, it certainly raises some concerns especially if this becomes a trend. The index is trading better after the report perhaps on speculation the Fed may skip a few rounds of tapering in the future if the jobs market continues to weaken each month.

Technically, the index found support this morning on an uptrending Gann angle at 1833.25. A retracement zone at 1831.75 to 1835.25 also came in to stop the early slide. Upside momentum was strong enough to take out a downtrending angle at 1839.50, falling short of another angle at 1843.00. Taking out the latter should lead to a test of the contract high at 1846.50.

The market is expected to open with an upside bias. This is an indication that investors have accepted today’s weak jobs data. It is possible that the buying may dry up later today as the market nears the contract high, but this will not indicate weakness unless it produces a closing price reversal top on the hourly or daily charts.