E-mini S&P 500 Index (ES) Futures Technical Analysis – Reaction to 3975.00 – 3946.50 Sets Near-Term Tone

June E-mini S&P 500 Index futures are down sharply shortly before the mid-session on Wednesday as the three-day rally fizzled under the weight of a poor performance in shares of Target.

Target Corp stock fell 25.1% to the bottom of the S&P 500 after its first-quarter profit halved and the company warned of a bigger margin hit on rising fuel and freight costs.

At 14:58 GMT, June E-mini S&P 500 Index futures are trading 4009.50, down 75.25 or -1.84%. The S&P 500 Trust ETF (SPY) is at $400.68, down $7.64 or -1.87%.

Other retail growth stocks followed Target’s lead but not the same magnitude of its decline. Shares of other retailers such as Walmart Inc, Gap Inc, Kohl’s Corp, Nordstrom Inc, Costco, Best Buy, Macy’s Inc and Dollar General Corp dropped between 4.1% and 11.8%.

All of the 11 major S&P sectors declined in the morning trade, with consumer staples and consumer discretionary sectors down 3.5% each.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 3855.00 will signal a resumption of the downtrend. A move through 4303.00 will change the main trend to up.

The short-term range is 4303.00 to 3855.00. Its retracement zone at 4079.00 to 4132.00 stopped the rally earlier today at 4095.00.

The minor range is 3855.00 to 4095.00. Its retracement zone at 3975.00 to 3946.75 is the next downside target.

Daily Swing Chart Technical Forecast

Trader reaction to 4090.50 will determine the direction of the June E-mini S&P 500 Index into the close on Wednesday.

Bearish Scenario

A sustained move under 4090.50 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to possibly continue into 3975.00 to 3948.75.

Aggressive counter-trend buyers could come in on the first test of this area. They are going to try to produce a potentially bullish secondary higher bottom. If 3946.50 fails to hold then look for the selling to possibly extend into 3855.00, followed by 3844.50.

Bullish Scenario

A sustained move over 4090.50 will signal the presence of buyers. Overtaking the intraday high at 4095.00 will indicate the buying is getting stronger. This could create the momentum needed to overtake the short-term Fibonacci level at 4132.00.