E-mini S&P 500 Index (ES) Futures Technical Analysis – Strengthens Over 4366.00, Weakens Under 4328.25

December E-mini S&P 500 Index futures are trading lower shortly before the cash market opening on Monday as investors dealt with a number of issues including rising bond yields, inflation risk, higher taxes and lingering concerns over China Evergrande’s debt problems and rising COVID-19 cases.

At 12:33 GMT, December E-mini S&P 500 Index futures are trading 4329.00, down 14.75 or -0.34%.

The S&P 500 finished September down 4.8%, breaking a seven-month winning strength. Additionally, heading into the fourth quarter, more than half of all S&P stocks are off at least 10%. However, the S&P 500 has averaged gains of 3.9% in the fourth quarter and was up four out of every five years since World War II, according to CFRA.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, Friday’s closing price reversal bottom suggests momentum may be getting ready to shift to the upside.

A trade through 4365.75 will confirm the closing price reversal bottom and shift momentum to the upside. This won’t change the trend, but it could lead to the start of a 2 to 3 day counter-trend rally.

A trade through 4472.00 will change the main trend to up. A move through 4260.00 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The main range is 4117.00 to 4539.50. Its retracement zone at 4328.25 to 4278.50 is the major support. This zone is controlling the near-term direction of the index.

The minor range is 4472.00 to 4260.00. Its 50% level or pivot at 4366.00 is potential resistance.

The short-term range is 4539.50 to 4260.00. Its retracement zone at 4399.75 to 4432.75 is the primary upside target and resistance area.

Daily Swing Chart Technical Forecast

The direction of the December E-mini S&P 500 Index into the close on Monday is likely to be determined by trader reaction to 4328.25.

Bearish Scenario

A sustained move under 4328.25 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into 4278.50, followed closely by the reversal bottom at 4260.00.

The reversal bottom at 4260.00 is a potential trigger point for an acceleration to the downside with the next target the main bottom at 4214.50.

Bullish Scenario

A sustained move over 4328.25 will signal the presence of buyers. If this move creates enough upside momentum then look for the buying to possibly extend into 4366.00. Since the main trend is down, look for sellers on the first test of this level.

Overtaking 4366.00 will indicate the buying is getting stronger. This could trigger a further rally into 4399.75 to 4432.75.

Side Notes

Make sure you know if you’re a momentum trader or a value investors. Momentum sellers are going to try to continue to pound the market lower in an effort to trigger a breakdown under 4278.40. Value seeking investors are going to try to buy 4328.25 to 4278.50.