The direction of the September E-mini S&P 500 Index on Thursday is likely to be determined by trader reaction to 4527.50.
September E-mini S&P 500 Index futures close nearly flat in lackluster trading on Wednesday, while holding inside the previous session’s range. The price action suggests investor indecision and impending volatility although the cash market managed to hit a record high during the day.
The benchmark index is being underpinned by fresh technology stock buying combined with hopes the Federal Reserve would keep the stimulus taps open after weaker-than-expected private payrolls data.
On Wednesday, September E-mini S&P 500 Index futures settled at 4521.25, up 0.75 or +0.02%.
In economic news, payroll services firm ADP reported that U.S. companies created much fewer jobs than expected in August as the COVID-19 resurgence coincided with cutbacks in hiring.
The main trend is up according to the daily swing chart, however, momentum may be getting to shift to the downside with the formation of a potentially bearish closing price reversal top on Tuesday.
A trade through 4542.25 will negate the closing price reversal top and signal a resumption of the uptrend. A move through 4512.50 will confirm the chart pattern and shift momentum to the downside. The main trend will change to down on a trade through 4462.25.
The minor range is 4462.25 to 4542.25. Its retracement zone at 4502.25 is the nearest downside target and possible support area.
The short-term range is 4347.75 to 4542.25. If the main trend changes to down then look for the selling to possibly continue into its retracement zone at 4445.00 to 4422.00.
The direction of the September E-mini S&P 500 Index on Thursday is likely to be determined by trader reaction to 4527.50.
A sustained move under 4527.50 will indicate the presence of sellers. Taking out 4512.50 will confirm the closing price reversal top. This won’t change the trend, but it could trigger the start of a 2 to 3 day correction.
The first downside target is 4502.25 to 4492.75. Watch for a technical bounce. We could see an acceleration into 4462.25 over the short-run if sellers can take out 4492.75.
A sustained move over 4527.50 will signal the presence of buyers. If this creates enough upside momentum then look for a test of 4542.25. Taking out this level will signal a resumption of the uptrend. It could fuel an acceleration to the upside if the buying volume is strong enough.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.