E-mini S&P 500 Index (ES) Futures Technical Analysis – Tech Sector Recovery Helping to Pare Earlier Losses

September E-mini S&P 500 Index futures are down late Thursday, but off their intraday lows as disappointing quarterly results from two large U.S. banks and hotter-than-expected consumer and producer inflation data prompted a spike in recession fears.

The benchmark index opened the cash market sharply lower in the wake of second-quarter earnings from JPMorgan Chase & Co and Morgan Stanley. Both reported slumping profits and warned of impending economic slowdown.

At 18:04 GMT, September E-mini S&P 500 Index futures are trading 3795.50, down 9.00 or -0.24%. This is up from an intraday low at 3723.75. The S&P 500 Trust ETF (SPY) is at 378.39, down $0.44 or -0.12%.

Losses are being pared late in the session with a gain in semiconductors helping to lift the technology sector into positive territory.

Short-Term Outlook

Trader reaction to 3804.50 is likely to determine the direction of the September E-mini S&P 500 Index into the close on Thursday.

Bullish Scenario

A sustained move over 3804.50 will indicate the presence of buyers. If this move creates enough upside momentum then look for a possible surge into the minor retracement zone at 3837.00 to 3863.50. This area is the last potential resistance before the resistance cluster at 3922.00.

A trade through 3922.00 will change the main trend to up. A move through 3950.00 will reaffirm the uptrend, but I’m won’t get excited about the upside until I see a close over the main Fibonacci level at 3988.75.

Bearish Scenario

A sustained move under 3804.50 will signal the presence of sellers. Breaking below the short-term 50% level at 3794.50 will indicate the selling is getting stronger. This could trigger a quick break into the short-term Fibonacci level at 3757.75. This is the last potential support before the intraday low at 3723.75.

Taking out 3723.75 will reaffirm the downtrend with the main bottom at 3639.00 the next major downside target.