E-mini S&P 500 Index (ES) Futures Technical Analysis – Short-Covering Getting Stronger Ahead of Friday’s Close

June E-mini S&P 500 Index futures are trading higher late in the session on Friday following a strong cash market close. The move represents follow-through buying tied to Thursday’s rebound rally. With the fundamentals still bearish and the daily chart pattern looking ugly, the current price action is indicative of short-covering as buyers try to prevent the benchmark index from sliding into bear market territory.

In the cash market, the S&P 500 on Friday finished its best day since May 4. Despite those gains, the index fell 2.4% and hit its longest weekly losing streak since 2011.

All the S&P 500 sectors close higher led by gains in consumer discretionary and information technology, which added 4.1% and 3.4%, respectively. It was a broad-based comeback with about 95% of the S&P 500 ending the session in the green.

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 minor range is 4303.00 to 3855.00. Its retracement zone at 4079.00 to 4132.00 is the first potential upside target area.

A second minor range is 3855.00 to 4036.00. Its pivot at 3945.50 is the nearest intraday support.

Short-Term Outlook

The direction of the June E-mini S&P 500 Index into the close on Friday will be determined by trader reaction to 3945.50.

Bullish Scenario

A sustained move over 3945.50 will indicate the presence of buyers. Taking out the intraday high at 4036.00 will indicate the buying is getting stronger. This could generate enough late session momentum to trigger a rally into the short-term retracement zone at 4079.00 to 4132.00. Since the main trend is down, look for sellers on the first test of this area.

Bearish Scenario

A late session break under 3945.50 will be a sign of weakness. A close under this level will put the index in a position to resume the selling pressure early next week.