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James Hyerczyk
E-mini S&P 500 Index
E-mini S&P 500 Index

December E-mini S&P 500 Index futures are expected to open lower based on the pre-market trade. Conditions have stabilized somewhat from earlier in the session when it looked like we were in for a 40 point loss on the opening. We’re not out of the woods at all, but the early price action actually brings us closer to a closing price reversal bottom which is the best trading pattern to stop the price slide.

Daily December E-mini S&P 500 Index

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 2824.25 will change the main trend to up. The market is down 7 sessions from the last main top which puts it in the window of time for a potentially bullish closing price reversal bottom. The chart pattern won’t change the trend, but it will indicate the buying is greater than the selling at current price levels.

We’ve already had our lower-low, now all we need is to turn higher for the session. This could trigger a strong intraday short-covering rally. At the end of the session, we’ll need a higher-close, close above the opening and a close above the mid-point of the day to give a strong counter-trend buy signal. Yesterday’s close was 2688.25.

If the selling continues and it begins to escalate then 2602.75 and 2562.50 will be the next major downside targets.


Daily Technical Forecast

The nearest support angle comes in at 2635.50. We could see a technical bounce on the first test of this angle. If it fails then look for the selling to extend into a support cluster at 2602.75 to 2599.00. Counter-trend buyers could come in on a test of this level. If it fails then we could see an acceleration into 2562.50.

Crossing to the strong side of yesterday’s close at 2688.25 will indicate the buying is getting stronger. This could trigger a short-covering rally into a series of levels at 2701.75, 2708.50 and 2712.25. Since the trend is down, sellers are likely to come in on a test of these levels.

The downtrending Gann angle at 2712.25, however, is the trigger point for an acceleration into a major 50% level at 2748.50.

Don’t forget, crossing to the strong side of 2688.25 will put the index in a position to post a potentially bullish closing price reversal bottom.

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