E-mini S&P 500 Index (ES) Futures Technical Analysis – Lower on Corporate Bond Purchase News

September E-mini S&P 500 Index futures are trading higher shortly after the opening on Wednesday after rebounding from pre-opening losses. Shares of major tech companies such as Apple and Microsoft gained 2% and 1.7%, respectively. Netflix and Alphabet both climbed at least 0.8%.

Names that would benefit from the economy reopening turned around and added to the gains. Carnival Corp, Norwegian Cruise Line and Royal Caribbean gained 2.4%, 1.7% and 2.3%, respectively. Retailer Kohl’s climbed more than 5%.

At 14:57 GMT, September E-mini S&P 500 Index futures are trading 3152.75, up 16.25 or +0.54%.

Heightened volatility remains at the forefront with the economic data continuing to indicate a V-shaped recovery, while the rise in COVID-19 cases suggests this is the beginning of new economic headwinds.

“No one’s denied we’ve had a huge jump in cases in certain hot spots,” Kudlow said Wednesday. However, “one cannot rule out:  There’s a lot of scenarios here. We really don’t have any real experience in econometrics modeling for this type of thing. Because so much is generated by the virus. At the moment, we’ve created 8 million new jobs the last couple of months…Virtually every piece of data shows a V-shaped recovery.”

There is breaking news that the Fed is limiting the amount of its corporate bond purchases. This news is bearish.

Daily September E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum may be starting to shift to the downside with the formation of the potentially bearish closing price reversal top on Tuesday.

A trade through 3184.00 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a trade through 2983.50.

The closing price reversal top will be confirmed by a break through yesterday’s low. This won’t change the main trend, but it could lead to a 2 to 3 day correction.

The first downside target zone and potential support is 3107.00 to 3072.00.

The second downside target is the 50% level at 3053.75.

Daily Swing Chart Technical Forecast

A confirmation of the closing price reversal top will signal that the selling is greater than the buying at current price levels. If this continues to generate enough downside momentum then look for a minimum break to 3107.00.

We could see a technical bounce on the first test of 3107.00. However, it is also the trigger point for an acceleration to the downside with 3072.00 and 3053.75 the next potential downside targets.

For a look at all of today’s economic events, check out our economic calendar.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.