E-mini S&P 500 Index (ES) Futures Technical Analysis – Needs to Hold 4515.25 to Sustain Upside Momentum

December E-mini S&P 500 Index futures are moving higher during the pre-market session on Monday after posting a 1.63% gain last week on the back of strong corporate earnings.

Of the 117 companies in the S&P 500 that have reported earnings to date, 84% posted numbers that beat expectations, according to Refinitiv. S&P 500 companies are expected to grow profit by about 35% in the third quarter.

At 06:59 GMT, December E-mini S&P 500 Index futures are trading 4542.75, up 6.25 or +0.14%.

The benchmark index is up more than 5% this month. Leading the October rally in the broader market has been the energy sector, which is up 11% this month. Industrials, real estate, materials and financials have all popped at least 7% over the same period.

Some of the biggest technology companies are slated to report earnings this week, including Facebook, Alphabet, Microsoft, Amazon and Apple. A third of the Dow companies also is set to release quarterly results this week, including Caterpillar, Coca-Cola, Boeing and McDonald’s.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, Friday’s closing price reversal top may be a sign that momentum may be getting ready to shift to the downside. It all depends on whether the chart pattern is confirmed before a new high is made.

A trade through 4551.50 will negate the closing price reversal top and signal a resumption of the uptrend. A move through 4515.25 will confirm the closing price reversal top. This won’t change the main trend to down, but it could trigger the start of a 2 to 3 day or 50% correction of the current rally.

The minor range is 4515.25 to 4551.50. The index is currently trading on the strong side of its pivot at 4533.25.

The second minor range is 4317.25 to 4551.50. Its 50% level at 4434.25 is the next potential downside target.

The short-term range is 4260.00 to 4551.50. Its retracement zone at 4405.75 to 4371.25 is the nearest value zone.

Daily Swing Chart Technical Forecast

The direction of the December E-mini S&P 500 Index early Monday is likely to be determined by trader reaction to the pivot at 4533.25 – 4533.50.

Bullish Scenario

A sustained move over 4533.50 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the record high at 4551.50.

Taking out 4551.50 will indicate the buying is getting stronger. If the volume is strong enough then we could see an acceleration to the upside.

Bearish Scenario

A sustained move under 4533.25 will signal the presence of sellers. The first downside target is 4515.25.

Taking out 4515.25 will confirm the closing price reversal top. This could trigger the start of a 2 to 3 day correction, or even the beginning of a sharp break into the nearest 50% level at 4434.25.