E-mini S&P 500 Index (ES) Futures Technical Analysis – Secondary Lower Top Indicating WeaknessThe set-up is there for a near-term correction, but bearish traders need to have a reason to start shorting the market.
September E-mini S&P 500 Index futures are trading lower, while pressing the lows of the session ahead of the close. Some say the selling is being fueled by concerns over the rising number of coronavirus cases in the U.S. and its impact on the economic recovery.
Others are saying it’s the huge double-digit lead that Democratic Presidential Candidate Joe Biden has over Republican President Donald Trump that is rattling investors.
Still others cite market fatigue as another reason for the weakness as investors cut back on trading at the start of the U.S. summer months.
While we’re at it, let’s blame the Fed for forcing banks to suspend share repurchase programs and cap dividend payments at current levels for the third quarter.
At 18:26 GMT, September E-mini S&P 500 Index futures are trading 3007.75, down $63.00 or -2.08%.
Banking giants Wells Fargo and Capital One are down for the day amid rumors they may be forced to cut their dividends. Airlines are also taking another hit with United Airlines, American and Delta all falling more than 4%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart, however, momentum is trending lower. Furthermore, the formation of a secondary lower top is also an indication that the selling is greater than the buying at current price levels.
A trade through 2923.75 will change the main trend to down, while a move through 3145.75 will signal a resumption of the uptrend.
The minor trend is down. This is controlling the downside momentum. The minor trend will change to up on a trade through 3082.75.
The minor range is 3220.50 to 2923.75. Its 50% level at 3072.25 is resistance.
The short-term range is 2751.50 to 3220.50. Its 50% level at 2986.00 is the nearest support. This is followed by the major Fibonacci level at 2926.25.
The set-up is there for a near-term correction, but bearish traders need to have a reason to start shorting the market.
The selling could start to accelerate to the downside if the short-sellers hit the market with a vengeance. However, if it’s just long liquidation we’re looking at, then the decline will be slow and gradual.
The trigger point for the next acceleration to the downside is the main bottom at 2923.75. Taking out this level could trigger a break into at least 2781.00.
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