E-mini S&P 500 Index: Tough to Sustain Rally without More Solid Support Base
June E-mini S&P 500 Index futures are trading lower late in the session on Thursday after erasing all of yesterday’s gains as investors fretted the Federal Reserve’s rate hike might not be enough to bring inflation under control and the U.S. central bank might need to take more drastic action.
The U.S. central bank on Wednesday raised interest rates by half a percentage point as expected and Fed Chair Jerome Powell explicitly ruled out a hike of 75 basis points in a coming meeting.
Only 22 constituents of the S&P 500 index were green by 18:00 GMT. Additionally, all of the 11 major S&P sectors are down, with consumer discretionary leading the way.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through 4056.00 will signal a resumption of the downtrend. A move through 4509.00 will change the main trend to up.
The minor trend is also down. Taking out 4303.50 will change the minor trend to up, shifting momentum to the upside in the process.
The minor range is 4303.50 to 4056.00. Its 50% level at 4179.75 is the nearest resistance. The second closest resistance is a 50% level at 4343.50.
The direction of the June E-mini S&P 500 Index into the close on Thursday is likely to be determined by trader reaction to 4179.75.
A sustained move under 4179.75 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the main bottom at 4056.00.
Taking out 4056.00 should lead to a quick test of the May 12, 2021 main bottom at 4020.50. This is a potential trigger point for an acceleration to the downside.
A sustained move over 4179.75 will signal the presence of buyers. If this generates enough upside momentum then look for a late session surge into the resistance cluster at 4282.50 – 4303.50.