E-mini S&P 500 Index (ES) Futures Technical Analysis – Reaction to 4158.25 – 4241.00 Sets Tone This Week

June E-mini S&P 500 Index futures rose sharply on Friday after a report showed signs of peaking inflation and strong consumer spending drove investors into the long U.S. holiday weekend amidst growing optimism that the Federal Reserve will be able to avoid tipping the economy into recession despite its plan to aggressively raise interest rates by 50 basis points in both June and July.

On Friday, June E-mini S&P 500 Index futures settled at 4155.75, up 100.00 or +2.41%. The S&P 500 Trust ETF (SPY) finished at $415.34, up $10.03 or +2.48%.

In economic news, reports released on Friday showed better-than-expected consumer spending and appeared to confirm that inflation, which has dampened corporate earnings guidance and weighed on investor sentiment, has peaked.

In stock related news, all 11 major sectors of the S&P 500 advanced amid light trading, with consumer discretionary, tech and real estate attaining the biggest percentage gains.

Traders should note that trading volumes were below average ahead of the long weekend, with U.S. stock markets closed on Monday in observance of Memorial Day.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up when buyers took out the previous main top at 4095.00. A trade through 3807.50 will change the main trend to down.

The minor trend is also up. A trade through 3872.00 will change the minor trend to down. This will shift momentum to the downside.

The short-term range is 4303.00 to 3807.50. The index is currently trading on the strong side of its retracement zone at 4113.75 to 4055.25, making it support.

The intermediate range is 4509.00 to 3807.50. Its retracement zone at 4158.25 to 4241.00 is the next upside target.

Short-Term Outlook

Trader reaction to 4158.25 will likely determine the direction of the June E-mini S&P 500 Index early Monday.

Bullish Scenario

A sustained move over 4158.25 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into the Fibonacci level at 4241.00.

Sellers could come in on the first test of 4241.00. However, overcoming this level could trigger a surge into the main top at 4303.00.

Bearish Scenario

A sustained move under 4158.25 will signal the presence of sellers. This could lead to a labored break with the next targets a short-term Fibonacci level at 4113.75 and a short-term 50% level at 4055.25.

If 4055.25 fails, the selling pressure could extend into 3987.75.