The direction of the June E-mini S&P 500 Index into the close on Friday is likely to be determined by trader reaction to 4299.25.
June E-mini S&P 500 Index futures are trading sharply lower at the mid-session on Friday after some weak earnings reports, with growth stocks coming under pressure in a torrid week that saw bond yields surge on expectations of interest rate hikes.
At 16:01 GMT, June E-mini S&P 500 Index futures are trading 4310.25, down 80.25 or -1.83%. The S&P 500 Trust ETF (SPY) is at $430.17, down $7.89 or -1.80%.
All the 11 major S&P 500 sectors fell, with healthcare stocks dropping the most after a downbeat profit forecast from HCA Healthcare sent its shares tumbling 16.7%.
Of the 99 companies in the S&P 500 that have reported earnings for the first quarter, 77.8% of them have beat market expectations. Typically, 66% of companies beat estimates, according to Refinitiv data.
In economic news, U.S. business activity slowed in April as soaring costs for raw materials, fuel and labor pushed input prices to a record high, according to a survey by S&P Global.
The main trend is down according to the daily swing chart. The downtrend was reaffirmed when sellers took out the last main bottom at 4355.50. A trade through 4509.00 will change the main trend to up.
The short-term range is 4094.25 to 4631.00. The index is currently testing its retracement zone at 4362.75 to 4299.25. This zone is controlling the near-term direction of the index.
The main range is 4800.00 to 4094.25. Its retracement zone at 4447.25 to 4530.50 is resistance.
The direction of the June E-mini S&P 500 Index into the close on Friday is likely to be determined by trader reaction to 4299.25.
A sustained move under 4299.25 will indicate the presence of sellers. This move can trigger an acceleration to the downside since the next major target doesn’t come in until 4129.50.
A sustained move over 4299.25 will signal the presence of buyers. If this move creates enough upside momentum then look for a late session surge into the short-term 50% level at 4362.75. Overtaking this level will indicate the buying is getting stronger. This could lead to a test of 4390.50. Taking out this level will turn the market higher for the day.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.