E-mini S&P 500 Index (ES) Futures Technical Analysis – Momentum Jumps Amid Lower Inflation Expectations

September E-mini S&P 500 Index futures are trading sharply higher shortly after the mid-session on Friday. The move has put the market in a position to post a higher close for the week.

The benchmark index was trading higher shortly after the cash market opening as traders dialed down bets on where interest rates might peak and brought forward the timing of rate cuts to counter a possible recession, according to Reuters.

What this means is that investors have started betting the Fed could slow the rate-tightening pace following another 75 basis-point increase in July, and may start easing policy after March 2023.

At 17:42 GMT, September E-mini S&P 500 Index futures are at 3891.50, up 91.75 or +2.41%. The S&P 500 Trust ETF (SPY) is trading $387.37, up $9.31 or +2.46%.

The index hit its high for the session after a consumer sentiment reading closely followed by the Federal Reserve showed a slight easing of inflation expectations.

The rally in the S&P 500 Index is broad-based, with 484 stocks positive for the session. The Financials were the best-performing sector in the broader market index after a succession of the nation’s largest banks passed the Federal Reserve’s annual “stress test.” The central bank said they have strong pools of capital to weather a serve recession.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through 4204.75 will change the main trend to up. A move through 3639.00 will signal a resumption of the downtrend.

The minor trend is up. This shifted momentum to the upside. The minor trend changed to up when buyers took out the minor top at 3843.00.

The short-term range is 4204.75 to 3639.00. Its retracement zone at 3922.00 to 3988.75 is the primary upside target.

Daily Swing Chart Technical Forecast

Trader reaction to 3799.75 is likely to determine the direction of the September E-mini S&P 500 Index into the close on Friday.

Bullish Scenario

A sustained move over 3799.75 will indicate the presence of buyers. If this move generates enough upside momentum then look for a surge into the short-term 50% level at 3922.00.

Since the main trend is down, sellers could come in on the first test of 3922.00. Taking it out, however, could extend the rally into the Fibonacci level at 3988.75.

Bearish Scenario

A sustained move under 3799.75 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the new minor pivot at 3766.75.

Side Notes

The next major battle ground is 3922.00 to 3988.75. Trend traders are going to try to form a new secondary lower top. Aggressive counter-trend buyers are going to try to break out above 3922.00 then 3988.75.