E-mini S&P 500 Index (ES) Futures Technical Analysis – Set Up for Test of 2019 Close at 3231.00

June E-mini S&P 500 Index futures are inching higher on Monday shortly before the cash market opening. Traders are still riding the wave of last week’s steep gains, fueled on Friday by a surprisingly strong U.S. Non-Farm Payrolls report.

Investors continue to bet on the reopening of economy leading to a faster than expected recovery. In doing so, they are betting on stocks in industries that could benefit the most from a V-Shaped recovery like Airlines, retailers and cruise lines. In pre-market trading, United Airlines is up 10%. Kohl’s added 6% and shares of Carnival Corp. are up more than 16%.

At 12:35 GMT, June E-mini S&P 500 Index futures are trading 3209.50, up 22.75 or +0.71%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed when buyers took out Friday’s high, however, so far the follow-through rally has been disappointing.

The best sign of a top will be a closing price reversal top. This won’t change the main trend to down, but it could trigger the start of a near-term correction. Essentially, it will indicate the selling is greater than the buying at current price levels. We could also see a little position-squaring ahead of the Fed announcements on Wednesday.

The minor trend will change to down on a move through 2992.00. The main trend changes to down on a move through the last swing bottom at 2903.75.

The major retracement zone support comes in at 2930.25 to 2785.75. Once a minor top forms, we’ll be looking for a minor retracement zone. Right now the minor 50% level is 3101.75, but this will change if the market moves above 3211.50.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the June E-mini S&P 500 Index the rest of the session on Monday is likely to be determined by trader reaction to 3186.75.

Bullish Scenario

A sustained move over 3186.75 will indicate the presence of buyers. The first target is the December 31, 2019 close at 3231.00. Overtaking this level will turn the market higher for the year. If this creates enough upside momentum then look for the buying to possibly extend into the February 20 contract high at 3397.75.

Bearish Scenario

A sustained move under 3186.75 will signal the presence of sellers. If confirmed, we could see an eventual break into the minor 50% level, currently at 3101.75. The selling could take place over a 2 to 3 day period.

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