E-mini S&P 500 Index (ES) Futures Technical Analysis – Reaction to 3921.75 – 3988.75 Sets Near-Term Tone

September E-mini S&P 500 Index futures are trading higher late in the session on Wednesday, boosted by strong performances in the Consumer Discretionary and Technology sectors with both gaining over 1.30%. The catalyst is optimistic investors betting that profits will stay high enough to boost the market.

Despite the continuation of the rally, keep in mind that the benchmark index is still retracing a previous break. Furthermore, the move is taking place under low volume conditions.

At 18:02 GMT, September E-mini S&P 500 Index futures are trading 3943.75, up 6.25 or +0.16%. The S&P 500 Trust ETF (SPY) is at $393.03, up $0.76 or +0.19%.

In stock related news, Netflix jumped 3%, Baker Hughes plunged 10% and Biogen declined more than 3%.

On the economic front, a report from the Mortgage Bankers Association pointed to more pain for U.S. consumers as they deal with higher prices and interest rates. Mortgage demand declined more than 6% last week compared with the prior week, dropping to its lowest level in 22 years.

Additionally, sales of previously owned homes in June fell 5.4% from May, according to a monthly report from the National Association of Realtors, as prices set records and rates surged.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed when buyers took out the main top at 3950.00. A trade through 3723.75 will change the main trend to down.

The intermediate range is 4204.75 to 3639.00. The index is currently testing its retracement zone at 3822.00 to 3988.75. This is potential resistance and also a potential trigger point for an acceleration to the upside.

On the downside, the nearest support comes in at 3808.25 to 3768.50.

Daily Swing Chart Technical Forecast

Trader reaction to the intermediate 50% level at 3821.75 is likely to determine the direction of the September E-mini S&P 500 Index into the close on Wednesday.

Bullish Scenario

A sustained move over 3922.00 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the Fibonacci level at 3988.75.

Taking out 3988.75 will be a sign of strength. If there are enough buyers then look for the start of an acceleration to the upside with 4169.25 the next potential upside target.

Bearish Scenario

A sustained move under 3921.75 will signal the presence of sellers. If this move generates enough downside momentum then look for the start of a sharp break into the short-term retracement zone at 3808.25 to 3768.50.