E-mini S&P 500 Index (ES) Futures Technical Analysis – Momentum Sellers Targeting 4500.25 – 4443.50

In a volatile trading session, December E-mini S&P 500 Index futures are trading sharply lower late in the session on Tuesday as investors reassessed risks associated with the new COVID variant, omicron, while dealing with hawkishly perceived remarks from Federal Reserve Chairman Jerome Powell.

At 21:36 GMT, December E-mini S&P 500 Index futures are trading 4580.00, down 71.00 or -1.53%.

Shares tumbled early in the session after Moderna CEO Stephane Bancel told the Financial Times that he expects existing vaccines to be less effective against the new variant.

Later in the session, stocks were driven to their session lows after Federal Reserve Chairman Jerome Powell said the central bank will discuss speeding up the bond-buying taper at its December meeting.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the intraday low at 4557.00 early Wednesday will signal a resumption of the downtrend. A move through 4717.00 will change the main trend to up.

The short-term range is 4260.00 to 4740.50. Its retracement zone at 4500.25 to 4443.50 is the next key downside target. Aggressive counter-trend buyers could come in on a test of this area.

The intermediate range is 4117.00 to 4740.50. Its retracement zone at 4428.75 to 4355.25 is the next major downside target.

The two zones combine to form a potential support cluster at 4443.50 to 4428.75.

The new short-term range is 4750.50 to 4557.00. If there is a short-term retracement of the current sell-off then its retracement zone at 4648.75 to 4670.50 will become the primary upside target. Since the main trend is down, sellers are likely to come in on a test of this area.

Short-Term Outlook

The key level to watch early Wednesday is 4557.00. Taking out this level will signal a resumption of the downtrend. If this move is able to generate enough downside momentum then look for the selling to possibly extend into the first 50% level at 4500.25.

If enough counter-trend buyers come in to defend 4557.00 then look for a possible retracement of the current sell-off. This would make 4648.75 to 4670.50 the next potential upside target.

Side Notes

Given the steep sell-off and the news driven trade, the market is vulnerable to a closing price reversal bottom. This could be dangerous for short-sellers so pay attention to the price action and order flow.