E-mini S&P 500 Index (ES) Futures Technical Analysis – Pullback into 3735.00 Could Alleviate Some Pressure

March E-mini S&P 500 Index futures are trading lower at the mid-session after giving back earlier gains. Wall Street’s benchmark index inched higher shortly after the opening on Tuesday ahead of the start of corporate America’s reporting season that could signal a rebound in earnings, but may have turned south as Treasury yields continued to rise.

At 17:21 GMT, March E-mini S&P 500 Index futures are trading 3776.00, down 16.00 or -0.42%.

There is some chatter on Wall Street today that investors have begun pricing for the possibility that the Fed raises rates in 2023, sooner than previously expected. Furthermore, expectations of a multitrillion-dollar stimulus plan, the belief that the Federal Reserve will not push back on rising interest rates and new Treasury supply this week are helping yields to rise.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 3817.75 will signal a resumption of the uptrend. The main trend will change to down on a move through 3596.00.

The minor trend is also up. The minor trend will change to down on a move through 3652.50.

The first downside target is a 50% level at 3735.00. This is followed by 50% levels at 3706.75 and 3657.50.

The main range is 3216.25 to 3817.75. If the main trend changes to down then its retracement zone at 3517.00 to 3446.00 will become the primary downside target.

Daily Swing Chart Technical Forecast

There’s not much to comment on at the mid-session except to say we probably in a headline driven market. No major headlines, no major movement.

Rising yields should be a concern, however, because stocks and bonds are competing assets. Wall Street investors are probably talking about the yield level that could encourage investors to reallocate some of the money in stocks into the improving Treasury and Note yields.

Uncertainty is another factor driving the price action. I don’t think the politics in Washington are a factor with Trump scheduled to turn over power on January 20 but the start of earnings season nearly always raises the worry bar.

We’re not too worried about the upside because the main trend is up. We are worried a little about the size of the follow-through rally, however, since despite making record highs nearly every day since December 28, the index is getting a little “bunched up”.

On the downside, we have three relatively close targets at 3735.00, 3706.75 and 3657.50. So any selling is likely to be a labored event. The key level that has to hold is 3657.50 because this is a potential trigger point for an acceleration to the downside.

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