E-mini S&P 500 Index (ES) Futures Technical Analysis – ‘One and Done’ Sell-Off or Actual Change in Trend?

March E-mini S&P 500 Index futures are trading sharply lower late in the session on Wednesday, weighed down in part by a slump in Boeing and hedge funds trimming long positions to cover numerous short squeezes.

Shares of videogame retailer GameStop Corp and movie theater operator AMC Entertainment Holdings Inc each more than doubled on Wednesday, continuing a torrid run higher over the past week, as amateur investors again piled into the stocks, forcing short-sellers such as Citron to abandon their losing bets.

At 21:37 GMT, March E-mini S&P 500 Index futures are trading 3727.25, down 115.25 or -3.00%.

Although the benchmark index fell further after the Fed’s monetary announcement at 19:00 GMT, stocks largely held losses in the wake of the statement from central bank policymakers. The Fed kept overnight interest rates near zero and made no change to its monthly bond purchases, as was widely expected, and pledged to keep that support intact until a full economic rebound is in place.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Wednesday when sellers took out the swing bottom at 3788.50. It was reaffirmed when 3740.50 failed to hold.

The short-term range is 3596.00 to 3862.25. Its 50% to 61.8% retracement zone stopped the selling at 3706.50.

The next major range is 3497.25 to 3862.25. Its retracement zone at 3679.75 to 3636.75 is another potential downside target zone. The lower or Fibonacci level at 3636.75 is a potential trigger point for an acceleration to the downside.

Short-Term Outlook

If Wednesday’s sell-off was overcooked then look for a possible retracement of the minor break from 3862.25 to 3706.50. This would make 3784.50 the next upside target.

The next decision point for traders will be following a test of 3784.50. Since the main trend is down, sellers are likely to come in on a test of this zone. They are going to try to form a potentially bearish secondary lower top. If successful, this could lead to further weakness.

Overtaking 3784.50 will likely indicate that Wednesday’s sell-off was a “one and done” event.

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