E-mini S&P 500 Index (ES) Futures Technical Analysis – Trader Reaction to 4668.50 Pivot Sets the Tone

December E-mini S&P 500 Index futures closed slightly better on Monday but off its high as technology stocks gave back early gains on concerns over rising Treasury yields. Meanwhile, a reversal from early weakness in crude oil prices drove the energy sector higher. Additionally, bank stocks benefited from rising yields, with the financials sector adding 0.3%. Yields rose as investors positioned for potential effects of the Federal Reserve’s tapering.

On Monday, December E-mini S&P 500 Index futures settled at 4679.00, up 0.75 or +0.02%. This was down from an intraday high of 4697.50.

The focus this week will be on earnings reports from several major retailers including Walmart Inc, Target Corp, Home Depot Inc and Macy’s Inc. Their results will round off an upbeat third-quarter earnings season, which pushed the benchmark index to record highs.

In stock related news, Dollar Tree Inc jumped 14.28% and was the top gainer on the S&P 500 after activist investor Mantle Ridge LP revealed a 5.7% stake in the discount retailer.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 4711.75 will signal a resumption of the uptrend. A move through 4625.25 will change the main trend to down.

The first minor range is 4711.75 to 4625.25. The market is currently trading on the strong side of its pivot at 4668.50.

The second minor range is 4543.75 to 4711.75. Its 50% level at 4627.75 is potential support. It’s also the trigger point for an acceleration to the downside.

The next major support targets are a minor pivot at 4514.50, followed by a short-term retracement zone at 4485.75 to 4432.50.

Daily Swing Chart Technical Forecast

The direction of the December E-mini S&P 500 Index early Tuesday is likely to be determined by trader reaction to 4679.00.

Bullish Scenario

A sustained move over 4679.00 will indicate the presence of buyers. Taking out 4697.50 will indicate the buying is getting strong. If this move is able to generate enough upside momentum then look for a possible surge into the record high at 4711.75.

Bearish Scenario

A sustained move under 4679.00 will signal the presence of sellers. The first downside target is the minor pivot at 4668.50.

Crossing to the weak side of the pivot at 4668.50 will indicate the selling is getting stronger. The first downside target is a minor pivot at 4661.25. If this fails then look for the selling to possibly extend into the support cluster at 4627.75 – 4625.25.

Taking out 4625.25 will change the main trend to down. The daily chart indicates there is plenty of room to the downside so don’t be surprised by the start of a near-term acceleration to the downside.