E-mini S&P 500 Index (ES) Futures Technical Analysis – Near Reversal Top Signals Top-Heavy Market

March E-mini S&P 500 Index futures are trading marginally higher shortly before the close, easing a little from a record high hit earlier in the session on Tuesday. The rally appears to have stalled as investors awaited progress in passing President Joe Biden’s $1.9 trillion stimulus plan.

At 21:34 GMT, March E-mini S&P 500 Index futures are trading 3909.00, up 1.00 or +0.03%.

Largely upbeat corporate earnings so far along with monetary and fiscal support have powered the S&P’s six-day run but analysts have cautioned against risks from new coronavirus variants and any glitches in vaccine rollouts.

In other news, the energy sector, among the sectors that led the recent rally, shed about 2% while defensive utilities, consumer staples and real estate outperformed among major S&P sectors.

Analysts see fourth-quarter S&P earnings to gain 2.4%, a stark reversal from the 10.3% annual decline seen at the beginning of the year, per Refinitiv.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed early Tuesday when buyers took out the previous day’s high at 3911.25.

A trade through 3911.25 will change the main trend to down. This is highly unlikely but the steep six-day rally has put the index inside the window of time for a potentially bearish closing price reversal top. This chart pattern won’t change the main trend to down, but if confirmed, it could trigger the start of a 2 to 3 day break, or a 50% – 61.8% correction of the current rally.

The minor range is 3656.50 to 3913.25. Its 50% level at 3784.75 is the nearest support level.

Short-Term Outlook

The direction of the March E-mini S&P 500 Index into the close and perhaps the rest of the week will be determined by trader reaction to yesterday’s close at 3908.00.

Bullish Scenario

A sustained move over 3908.00 will indicate the presence of buyers. If this move creates enough upside momentum then look for a retest of the intraday high at 3913.25.

Bearish Scenario

A sustained move under 3908.00 will signal the presence of sellers. A close under this level will form a closing price reversal top. If formed and confirmed on Wednesday, then look for the start of a possible 2 to 3 day correction with 3784.75 the nearest downside target price.

For a look at all of today’s economic events, check out our economic calendar.