E-mini S&P 500 Index (ES) Futures Technical Analysis – Benchmark Enters Bear Market Territory

June E-mini S&P 500 Index futures are trading sharply lower shortly after the mid-session on Friday. The selling pressure was strong enough to take out this week’s low, putting the benchmark index in bear market territory. This is the first bear market to hit the markets since the rapid decline in March 2020 at the onset of the pandemic.

The bear market was recognized when the S&P 500 Index declined 20% from its all-time high in January earlier in the session. Investors blamed rising recession fears for today’s sell-off. However, the overall downtrend has been fueled by the Fed aggressive monetary policy.

At 17:42 GMT, June E-mini S&P 500 Index futures are trading 3825.75, down 72.00 or -1.85%. The S&P 500 Trust ETF (SPY) is at $383.55, down $5.91 or -1.52%.

Daily June E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the intraday low at 3807.50 will signal a resumption of the downtrend. A move through 4095.00 will change the main trend to up.

The minor trend is also down. A trade through 3949.50 will change the minor trend to up. This will shift momentum to the upside.

Daily Swing Chart Technical Forecast

The direction of the June E-mini S&P 500 Index into the close on Friday will be determined by trader reaction to 3898.25.

Bearish Scenario

A sustained move under 3898.25 will indicate the presence of sellers. Taking out the intraday low at 3807.50 will indicate the selling pressure is getting stronger. This move could trigger an acceleration into the Mach 8, 2021 main bottom at 3759.50.

Bullish Scenario

A sustained move over 3898.25 will signal the presence of buyers. If this creates enough upside momentum then look for a surge into the intraday high at 3949.50. Taking out this level could trigger an acceleration to the upside on aggressive short-covering.

Side Notes

Due to the prolonged move down in terms of price and time, a close over 3898.25 will form a closing price reversal bottom. If confirmed, this could trigger the start of a 2-3 day retracement.

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

E-mini S&P 500 Index (ES) Futures Technical Analysis – Trade Thru 3844.50 Puts 3759.50 on Radar

June E-mini S&P 500 Index futures are down sharply shortly before the cash market opening on Thursday. The price action suggests the market could see more downside pressure throughout the session as investors continue to fret over rising inflation and its impact on U.S. economic growth and corporate earnings.

At 11:59 GMT, June E-mini S&P 500 Index futures are trading 3897.00, down 25.75 or -0.66%. On Wednesday, the S&P 500 Trust ETF (SPY) settled at $168.40, up $0.07 or -0.04%.

On Wednesday, the benchmark index logged its biggest one-day percentage loss since June 2020 after dismal results from retailer Target Corp underscored just how hard inflation is biting consumers.

Looking ahead, the early downside momentum suggests prices could weaken further throughout today’s session. Additionally, the way the market erased this week’s earlier gains indicates that traders are in the “sell the rally” mode.

Longer-term, the outlook isn’t so bright either with corporate earnings and the U.S. economy expected to suffer further damage due to factors ranging from the severity of China’s pandemic lockdowns, the conflict in Ukraine and the U.S. Federal Reserve’s hawkish stance.

Daily June E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 3855.00 will signal a resumption of the downtrend, while a move through the March 24, 2021 main bottom at 3844.50 will reaffirm the downtrend. On the upside, the main trend will change to up on a trade through 4095.00.

The minor range is 3855.00 to 4095.00. Its retracement zone at 3947.00 to 3975.00 is resistance.

The short-term range is 4303.00 to 3855.00. Its retracement zone at 4079.00 to 4132.00 topped the rally earlier in the week at 4095.00.

Daily Swing Chart Technical Forecast

Trader reaction to 3922.75 is likely to determine the direction of the June E-mini S&P 500 Index on Thursday.

Bearish Scenario

A sustained move under 3922.75 will indicate the presence of sellers. The first downside targets are 3855.00 and 3844.50.

If 3844.00 fails then look for the selling to possibly extend into the March 8, 2021 main bottom at 3759.50.

Bullish Scenario

A sustained move over 3922.75 will signal the presence of buyers. This could trigger a quick move into 3946.75 to 3975.00. Look for sellers to return on a test of this zone.

Overtaking 3975.00, however, will indicate the buying is getting stronger with 4079.00 – 4095.00 the next potential upside target.

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

Gold, Stocks, Bonds, Crypto And More

GLD (Gold ETF)

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From its high of 193 in early January to its recent low of 168, GLD has declined thirteen percent.

SPX (S&P 500 Index)

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From its high in late December at 4818, to its recent low of 3858, the S&P 500 Index has declined twenty percent.

TLT (Long Term US Treasury Bond Index)

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From its high point in early December at 155 to its recent low at 112, this ETF of long-term US Treasuries has declined twenty-seven percent.

BITCOIN FUTURES CME

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From its high point of just under 70,000 (69,355) in November past, the price of the most-watched cryptocurrency has declined a whopping sixty-three percent to its recent low at 25,350.

ALL-ASSET CRASH?

Before trying to answer that, there is another question to ask first that will help clarify the situation: Has any asset class or investment been going up lately? None that I am aware of – except energy and food.

Also, being short something is not an investment in a particular asset or asset class as much as it is a speculation on dropping prices. So we can rule out inverse ETFs, put options, and selling short.

We can also rule out real estate which seems to be treading water at best, with the possibility of going under as rates keep rising.

What about silver? I thought you’d never ask. Here is a similar chart to those above; this one is for SLV…

SLV (Silver ETF)

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From its 52-week high last June at 26.43 to its recent low at 19.01, SLV has declined twenty-eight percent.

Has anything gone up or at least not dropped recently? Well, yes; commodities in general. This includes primarily foodstuffs and energy which we have already mentioned, and some industrial commodities.

CRB INDEX

Since the beginning of the current calendar year the CRB Index has increased more than thirty percent. That is in direct contrast to nearly everything else we have mentioned thus far.

The index consists of 19 commodities: Aluminum, Cocoa, Coffee, Copper, Corn, Cotton, Crude Oil, Gold, Heating Oil, Lean Hogs, Live Cattle, Natural Gas, Nickel, Orange Juice, RBOB Gasoline, Silver, Soybeans, Sugar and Wheat. (source)

DIFFERENCES AND DISTINCTIONS

When we talk about the financial markets, we are referring to stocks (equities) and bonds (debts). We are also talking about derivatives based on those underlying items, such as ETFs, options, swaps, and spreads.

The financial markets are separate and distinct from the commodities markets. The fundamentals for both markets are different, yet, there are factors which can affect both markets.

The currency markets are also separate and distinct from the commodity and financial markets, although, what goes on in the currency markets can have significant impact on the financial (stock and bond) markets and, to a lesser extent, the commodities markets.

As in the financial markets, there are also derivatives in the commodities markets (options and futures) and currency markets (usually involving currency exchange rates).

FINANCIAL ASSETS ARE OVERPRICED

In the case of prices for stocks, bonds and other financial assets, the recent high prices discounted years of profitability.

Even allowing for a highly generous application of price-to-earnings ratios,  prices far exceeded the most favorable expectations for future growth.

The problem is much worse, though, than simple overvaluation of assets. The US and world economies are debt-dependent. The excessive valuations in financial asset prices are the result of an abundance of cheap credit.

Most economic activity is funded primarily by cheap credit; whether it be mortgages, business activity and corporate expansion, or retail consumption. Without access to unlimited amounts of credit the world economy would come to a standstill. The situation is precarious.

A FRAGILE ECONOMY AND A LOOMING DEPRESSION

Some are quick to assume that the Fed will take whatever steps are necessary to arrest the hellish descent. Of course, they will try. But they likely won’t be successful.

We have advanced too far down the path of money substitutes and cheap credit.

Also remember that the Fed is reacting to the effects of inflation and cheap credit which it (the Fed) created. (see Fed Action Accelerates Boom-Bust Cycle)

Whatever the Fed’s intentions are (or were), they caused the Great Depression of the 1930s and the Great Recession of 2008-2010.

The Next Great Depression will be worse and last longer. (Yes, I have said that before.)

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!

E-mini S&P 500 Index (ES) Futures Technical Analysis – Testing Key Retracement Zone at 4079.00 – 4132.00

June E-mini S&P 500 Index futures are trading higher at the mid-session on Tuesday, as Citigroup led a surge in bank shares after Berkshire Hathaway revealed a big stake and strong retail sales in April eased some concerns about slowing economic growth.

At 16:57 GMT, June E-mini S&P 500 Index futures are trading 4065.25, up 60.50 or +1.51%. The S&P 500 Trust ETF (SPY) is at $406.18, up $6.08 or +1.52%.

Sectors and Stocks

Ten of the 11 major S&P sectors advanced, with financials and technology up 2% each.

Microsoft Corp, Apple Inc, Tesla Inc and Nvidia Corp gained between 1.5% and 4.8%, providing the biggest boost to the S&P 500 and the NASDAQ Composite.

Banks jumped 3.1%, with Citigroup climbing 7.9%, after Warren Buffet’s Berkshire Hathaway disclosed a nearly $3 billion investment I the U.S. lender.

US Economic Reports

U.S. retail sales increased 0.9% in April as consumers bought motor vehicles amid an improvement in supply and frequented restaurants.

Another set of data showed industrial production accelerated 1.1% last month, higher than estimates of 0.5%, and followed by a 0.9% advance in March.

Daily June E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 3855.00 will signal a resumption of the downtrend. A move through 4303.00 will change the main trend to up.

The minor range is 4303.00 to 3855.00. Its retracement zone at 4079.00 to 4132.00 is the first upside target.

The short-term range is 4509.00 to 3855.00. Its 50% level at 4182.00 is the next resistance level.

Daily Swing Chart Technical Forecast

Trader reaction to 4079.00 will determine the direction of the June E-mini S&P 500 Index into the close on Tuesday.

Bullish Scenario

A sustained move over 4079.00 will indicate the presence of buyers. This could trigger a late session surge into 4132.00. Look for sellers on the first test of this level. Overtaking it, however, could trigger a further rally into 4182.00.

Bearish Scenario

A sustained move under 4079.00 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into an intraday pivot at 3969.25. Counter-trend buyers could come in on the first test of this price. If it fails then look for the selling to possibly extend into the main bottom at 3855.00.

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

US Stock Markets – Following Price One Page At A Time to Understand The Full Story

The same is true of the market, as each day is like the reading of another page. The pages of a book make up chapters. These chapters in trading represent bull markets, bear markets, distribution and accumulation, and time frames of high and low volatility.

Unfortunately, in trading, we cannot skip to the end of the book to learn how everything turns out. However, as traders, we have learned that studying and remembering the past can pay great dividends.

Trading price in its rawest form is simply plotting and studying price without the use of moving averages, stochastics, RSI, or other technical indicators. This simplified but often overlooked methodology can offer everything a trader needs to be successful.

NASDAQ 100 Lower Lows & Lower High

QQQ – The Nasdaq 100 ETF has been making lower lows and lower highs. A longer-term analysis of price is showing us that the 2022 low is lower than the lowest price that the QQQ had traded in 2021. The QQQ in 2021 had a peak to trough range of 26.03%. So far in 2022, the QQQ has had a peak to trough range of 28.71%.

Therefore: Price is showing that QQQ is breaking down and volatility is expanding as it is greater than last year.

QQQ • INVESCO QQQ TRUST ETF • NASDAQ • 4-HOUR

QQQ Trading Price chart

S&P 500 Lower Lows & Lower Highs

SPY – The S&P 500 ETF has been making lower lows and lower highs. The SPY in 2022 has had a peak to trough range of 18.74%.

Therefore: Price is showing us SPY is breaking down and it appears to have put in a major top with confirmation being a new swing low.

SPY • SPDR S&P 500 ETR TRUST • ARCA • 4-HOUR

SPY Trading Price Chart

DOW 30 Lower Lows & Lower Highs

DIA – The Dow Jones Industrials 30 ETF has been making lower lows and lower highs. The DIA in 2022 has had a peak to trough range of 15.02%.

Therefore: Price is showing us DIA is breaking down and appears to have put in a major top with confirmation being a new swing low.

Note: the DIA is doing better than the QQQ or SPY as money flow is rotating out of previously high-performing stocks and seeking safety in blue-chip lower performing stocks.

DIA • SPDR DOW JONES INDUSTRIAL AVERAGE ETF •ARCA • 4-HOUR

DIA Trading Price chart

US Dollar Higher Highs & Higher Lows

UUP – The US Dollar ETF has been making higher highs and higher lows. The UUP in 2022 has had a peak to trough range of 10.43%. UUP has also taken out the highest high that it made in 2021.

Therefore: The price is showing us UUP has broken out to the upside and is in a bull market with confirmation being a new swing high.

According to the 2019 Triennial Central Bank Survey conducted every three years by the Bank of International Settlements: trading in FX markets reached $6.6 trillion per day in April 2019. The BIS report further noted the USD is associated with 88% of all trades, which is $5.8+ trillion in USD daily transactional volume.

The US Dollar continues to attract capital from investors all over the world. But this may prove to be a double-edged sword for US stocks. As capital flocks to the USD, this, in turn, hurts US multinationals as they need to convert their weak foreign currency profits back into USD.

The USD safe-haven trade may eventually trigger a broad and deep selloff in US stocks. As the USD continues to strengthen, corporate profits for US multinationals will shrink or disappear.

UUP • INVESCO DB USD INDEX BULLISH FUND ETF • ARCA • 4-HOUR

UUP Trading Price Chart

Learn From Our Team of Seasoned Traders

In today’s market environment, it’s imperative to assess your trading plan, portfolio holdings, and cash reserves. Experienced traders know what their downside risk is and adapt as necessary. Successful traders manage risk by utilizing stop-loss orders, rebalancing existing positions, reducing portfolio holdings, liquidating investments, and moving into cash.

Successfully managing our drawdowns ensures our trading success. The larger the loss, the more difficult it will be to make up. Consider the following:

  • A loss of 10% requires an 11% gain to recover
  • A 50% loss requires a 100% gain to recover
  • A 60% loss requires an even more daunting 150% gain to simply return to break even.

Recovery time also varies significantly depending upon the magnitude of the drawdown. A 10% drawdown can typically be recovered in weeks or a few months, while a 50% drawdown may take several years to recover.

Depending on a trader’s age, they may not have the time to wait on the recovery or the patience. Therefore, successful traders know it’s critical to keep their drawdowns within reason, as most of them learned this principle the hard way.

At TheTechnicalTraders.com, my team and I can do these things:

  • Reduce your FOMO and manage your emotions.
  • Have proven trading strategies for bull and bear markets.
  • Provide quality trades for investing conservatively.
  • Tell you when to take profits and exit trades.
  • Save you time with our research.
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  • Have consistent growth with low volatility/risks.
  • Make trading and investing safer, more profitable, and educational.

Sign up for my free trading newsletter so you don’t miss the next opportunity!

We invite you to join our group of active traders who invest conservatively together. They learn and profit from our three ETF Technical Trading Strategies. We can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com

Chris Vermeulen
Chief Market Strategist
Founder of TheTechnicalTraders.com

E-mini S&P 500 Index (ES) Futures Technical Analysis – Intraday Momentum Could Shift on Sustained Move Over 3930.25

June E-mini S&P 500 Index futures are trading lower shortly after the cash market opening on Thursday after hitting a 1-1/2 year low during the pre-market session as fears mounted that fast-rising inflation will drive interest rates higher and bring the global economy to a standstill.

Those problems and a German warning that Russia was now using energy supplies as a “weapon” also pulled down Europe’s top stock indices and left MSCI’s index of world shares nearly 20% lower for the year.

At 13:34 GMT, June E-mini S&P 500 Index futures are at 3890.00, down 40.25 or -1.02%. The S&P 500 Trust ETF (SPY) is trading $388.15, down $4.60 or -1.17%.

Daily June E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the intraday low at 3883.25 will signal a resumption of the downtrend. A move through 4303.00 will change the main trend to up.

The minor range is 4303.00 to 3882.50. Its retracement zone at 4092.75 to 4142.50 is the nearest resistance.

Daily Swing Chart Technical Forecast

The direction of the June E-mini S&P 500 Index on Thursday is likely to be determined by trader reaction to 3930.25.

Bearish Scenario

A sustained move under 3930.25 will indicate the presence of sellers. Taking out the March 30, 2021 main bottom at 3904.75 will indicate the selling pressure is getting stronger. This could trigger a break into the March 24, 2021 main bottom at 3844.50.

A failure to hold 3844.50 could fuel an even further break into the March 8, 2021 main bottom at 3759.50.

Bullish Scenario

A sustained move over 3930.25 will signal the presence of buyers. A close over this level will form a potentially bullish closing price reversal bottom. If this generates enough upside momentum then look for a 2 to 3 day rally into 4092.75 – 4142.50.

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

E-mini S&P 500 Index (ES) Futures Technical Analysis – Heading Lower after CPI’s Bearish Miss

June E-mini S&P 500 Index futures are trading lower shortly before the cash market opening, erasing all of its earlier gains after the release of a key U.S. inflation report came in higher than expected.

At 12:41 GMT, the benchmark index is trading 3970.25, down 26.50 or -0.66%. This is down from an overnight high of 4050.50. On Tuesday, the S&P 500 Trust ETF (SPY) settled at $399.05, up $0.88 or +0.22%. Based on current trading conditions, it is expected to open lower.

April’s consumer price index showed an 8.3% jump. Dow Jones economists expected an 8.1% increase. This compares with March’s 8.5% year-over-year pace.

Stocks are under pressure because some traders were bottom-picking this week ahead of the report and betting inflation had peaked. The surge in inflation likely means the Fed is going to have to maintain its extremely hawkish stance and continue to attack price rises with aggressive 50-basis point rate hikes. This is bearish news for stocks.

Daily June E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 3961.75 will signal a resumption of the downtrend. A move through 4303.00 will change the main trend to up.

The minor range is 4303.00 to 3961.75. Its retracement zone at 4132.50 to 4172.75 is the nearest resistance. This zone will move lower if 3961.75 fails as support.

The short-term range is 4509.00 to 3961.75. Its 50% level at 4235.50 is additional resistance.

Daily Swing Chart Technical Forecast

The direction of the June E-mini S&P 500 Index on Wednesday is likely to be determined by trader reaction to 3991.50.

Bearish Scenario

A sustained move under 3991.50 will indicate the presence of sellers. The first downside target is 3961.75. Taking out this level will indicate the selling pressure is getting stronger. This could trigger a further break into the March 30, 2021 main bottom at 3904.75, followed by the March 24, 2021 main bottom at 3844.50.

Bullish Scenario

A sustained move over 3991.50 will signal the presence of buyers. Taking out the intraday high at 4050.50 will indicate the buying is getting stronger. This could trigger an acceleration into the minor retracement zone at 4132.50 to 4172.75.

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

E-mini S&P 500 Index (ES) Futures Technical Analysis – Buyers Looking to Extend Overnight Reversal

. June E-mini S&P 500 Index futures are trading higher at the cash market opening on Tuesday as risk appetite showed some signs of picking up again after Monday’s sharp sell-off, but fears over economic growth still weighed on sentiment.

This month’s crushing break in the benchmark index has been fueled by a combination of monetary tightening by major central banks and a slowdown in economic growth.

At 13:30 GMT, June E-mini S&P 500 Index futures are trading 4048.75, up 51.25 or 1.54%. On Monday, the S&P 500 Trust ETF (SPY) settled at $398.23, down $13.11 or -3.19%. Traders are expecting a higher opening based on the futures market performance.

The overnight rebound in the index was likely a technical reaction to the market breaking under the 4000.00 level for the first time since March 2021. Bottom-pickers likely came in as the market hit several oversold oscillator levels on the move.

Investors could also be squaring positions ahead of Wednesday’s key U.S. Consumer Price Index (CPI) report.

Daily June E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, but the market is showing signs of a shift in momentum. A trade through 3961.75 will signal a resumption of the downtrend, while a move through 4303.00 will change the main trend to up.

The minor range is 4303.00 to 3961.75. Its retracement zone at 4132.50 to 4172.75 is the nearest resistance.

The short-term range is 4509.00 to 3961.75. Its 50% level at 4235.50 is additional resistance.

Daily Swing Chart Technical Forecast

The direction of the June E-mini S&P 500 Index on Tuesday is likely to be determined by trader reaction to 3987.50.

Bullish Scenario

A sustained move over 3987.50 will indicate the presence of buyers. If this move generates enough upside momentum, we could see a surge into the minor 50% level at 4132.50. Sellers are likely to come in on the first test of this level. A failure to hold as support, however, is likely to lead to a test of the Fibonacci level at 4172.75.

Bearish Scenario

A sustained move under 3987.50 will signal the presence of sellers. This could trigger a retest of the intraday low at 3961.75. A failure to hold this level could extend the selling into the March 30, 2021 main bottom at 3904.75.

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

E-mini S&P 500 Index (ES) Futures Technical Analysis – Early Buyers Defending 4021.50 Main Bottom

June E-mini S&P 500 Index futures are trading lower shortly before the cash opening on Monday. After a volatile session on Friday in which the benchmark index sold off sharply as another rise in long-dated U.S. Treasury yields unnerved investors, markets were set for a rocky start to the week.

Today’s selling pressure is not only being fueled by worries about higher interest rates, but also a tightened lockdown in Shanghai which deepened investors’ fears that the global economy is rapidly heading for a slowdown.

At 13:02 GMT, June E-mini S&P 500 Index futures are trading 4053.75, down 65.75 or -1.60%. On Friday, the S&P 500 Trust ETF (SPY) settled at $411.40, down $2.41 or -0.58%.

Daily June E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. Reaffirming the downtrend earlier in the session was the failure to hold the previous main bottom at 4506.00. This has put the index in a position to challenge the May 12, 2021 main bottom at 4021.50. Meanwhile, a trade through 4303.00 will change the main trend to up.

The first minor range is 4303.00 to 4031.00. Its pivot at 4167.00 is the nearest upside target and potential resistance. This level will move lower if 4031.00 fails to hold.

The second potential resistance level is the pivot at 4270.00.

Daily Swing Chart Technical Forecast

The direction of the June E-mini S&P 500 Index on Monday is likely to be determined by trader reaction to 4119.50.

Bearish Scenario

A sustained move under 4119.50 will indicate the presence of sellers. If this move creates enough downside momentum then look for a retest of the intraday low at 4031.00. This is followed closely by the May 12, 2021 main bottom at 4021.50.

Taking out 4021.50 will put the index in a bearish position. If the selling pressure is strong enough, we could see an acceleration into the March 30, 2021 main bottom at 3904.75.

Bullish Scenario

A sustained move over 4119.50 will signal the presence of buyers. This could trigger an acceleration into the first minor pivot at 4167.00.

Side Notes

Following a prolonged move down in terms of price and time, a close over 4119.50 will form a potentially bullish closing price reversal top. If confirmed, this could trigger the start of a minimum two-day counter-trend rally.

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

E-mini S&P 500 Index Nearing 1-Year Bottom at 4020.50

June E-mini S&P 500 Index futures are trading lower shortly after the cash market close on Friday as investors struggled to find support after a dramatic week that saw all of the major indices post wicked moves in both directions. Friday’s weak performance has put the index in a position to post a loss for the week despite starting off the period with three straight positive sessions.

At 20:00 GMT, June E-mini S&P 500 Index futures are at 4108.50, down 34.75 or -0.84%. Meanwhile, the S&P 500 Trust ETF (SPY) just finished its session at $411.40, down $2.41 or -0.58%.

Friday’s early sell-off was a follow-through move related to weakness from the previous session. Thursday’s losses erased Wednesday’s big post-Federal Reserve meeting rally. Fed Chair Jerome Powell ruled out the prospect of larger rate hikes on Wednesday, sending the S&P 500 to its best daily gains since 2020. However, traders resumed their pressure on worries that the Federal Reserve will need to be more aggressive than expected in raising interest rates to combat inflation.

Daily June E-mini S&P 500 Index

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 4303.00 will change the main trend to up.

The minor range is 4303.50 to 4056.00. The index is trading on the weak side of its pivot at 4179.75, making it resistance.

The short-term range is 4509.00 to 4056.00. Its 50% level at 4282.50 is the last potential resistance before the 4303.00 main top.

Short-Term Outlook

The direction of the June E-mini S&P 500 Index into the close on Friday will be determined by trader reaction to 4143.25.

A sustained move under 4143.25 will indicate the presence of sellers. If this creates enough downside momentum then look for a retest of the intraday low at 4062.00, followed by a pair of main bottoms at 4056.00 and 4020.50.

Overtaking 4143.25 late in the session will signal the return of buyers. This could lead to a test of the pivot at 4179.75.

Side Notes

A close over 4143.25 will form a potentially bullish closing price reversal bottom. If confirmed then look for the start of a 2 to 3 day counter-trend rally.

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

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.

At 18:29 GMT, June E-mini S&P 500 Index futures are trading 4125.50, down 169.75 or -3.95%. The S&P 500 Trust ETF is at $412.29, down 16.77 or -3.91%.

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 June E-mini S&P 500 Index

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.

Short-Term Outlook

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.

Bearish Scenario

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.

Bullish Scenario

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.

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

E-mini S&P 500 Trying to Build on Monday’s Reversal Bottom

June E-mini S&P 500 Index futures closed higher on Tuesday after a choppy session in which the benchmark index fluctuated between gains and losses as a key meeting of the Federal Reserve got under way.

The price action showed investors were buying shares of financials and technology companies ahead of Wednesday’s expected announcement by the Fed.

On Tuesday, June E-mini S&P 500 Index futures settled at 4169.25, up 18.25 or +0.44%. The S&P 500 Trust ETF (SPY) finished at $416.39, up $1.91 or +0.46%.

Nine of the 11 major S&P 500 sectors rose, with energy and financials up 2.9% and 1.3%, respectively. The S&P 500 banks index gained 2%, with Citigroup Inc climbing 2.9%.

Eyes on Federal Reserve

The U.S. central bank is seen raising interest rates by 50 basis points and announce plans to reduce its $9 trillion balance sheet when it concludes its two-day meeting on Wednesday.

However, the spotlight will be on Fed Chair Jerome Powell’s news conference for comments on the future path of interest rates and balance sheet reduction.

Daily June E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the confirmation of Monday’s closing price reversal bottom.

A trade through 4056.00 will negate the chart pattern and signal a resumption of the downtrend. A move through 4509.00 will change the main trend to up.

The minor trend is also down. A trade through 4303.50 will change the minor trend to up. This will confirm the shift in momentum.

The first minor range is 4303.50 to 4056.00. Its pivot is 4179.75.

The second minor range is 4509.00 to 4056.00. Its pivot is 4282.50.

The short-term range is 4631.00 to 4056.00. If the minor trend changes to up then its pivot at 4343.50 will become the next target.

Short-Term Outlook

The direction of the June E-mini S&P 500 Index early Wednesday is likely to be determined by trader reaction to 4179.75.

Bullish Scenario

A sustained move over 4179.75 will indicate the presence of buyers. If this move creates enough upside momentum then look for a possible surge into the resistance cluster at 4282.50 – 4303.50.

Bearish Scenario

A sustained move under 4179.75 will signal the presence of sellers. The first downside target is a minor pivot at 4197.75. If this fails then look for a retest of the reversal bottom at 4056.00.

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

E-mini S&P 500 Index Bears Eyeing February Bottom at 4094.25

June E-mini S&P 500 Index futures are trading flat while testing both support and resistance early in the session as investors try to shake off last month’s steep losses ahead of this week’s widely expected 50-basis point rate hike by the U.S. Federal Reserve.

At 16:31 GMT, June E-mini S&P 500 Index futures are trading 4118.25, down 9.25 or -0.22%. The S&P 500 Trust ETF (SPY) is at $411.75, down $0.25 or -0.06%.

The Fed will start its two-day meeting on Tuesday, but we won’t hear from the Federal Open Market Committee until Wednesday afternoon. The FOMC will issue its statement on monetary policy at 18:00 GMT, with Federal Reserve Chairman Jerome Powell holding a press conference at 18:30 GMT.

In stock-related news, shares were mixed at the mid-session. Shares of Amazon and Apple continued to slide, but Netflix, Microsoft and Google-parent Alphabet were up. Honeywell, Intel and Home Depot also rose.

Daily June E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 4094.25 will reaffirm the downtrend, while a move through 4509.00 will change the main trend to up.

The minor trend is also down. A trade through 4303.50 will change the minor trend to up and shift momentum to the upside.

The index is currently down seven sessions from its last main top, putting it inside the window of time for a potentially bullish closing price reversal bottom.

The minor range is 4303.50 to 4098.00. Its pivot at 4200.75 is the nearest resistance.

Daily Swing Chart Technical Forecast

The direction of the June E-mini S&P 500 Index on Monday is likely to be determined by trader reaction to 4127.50.

Bearish Scenario

A sustained move under 4127.50 will indicate the presence of sellers. Taking out the intraday low at 4165.75 will be the first signal of increasing selling pressure. A move through the main bottom at 4094.25 will reaffirm the downtrend. This could trigger an acceleration into the May 12, 2021 main bottom at 4020.50.

Bullish Scenario

A sustained move over 4127.50 will signal the presence of buyers. If this creates enough upside momentum then look for a surge into the pivot at 4200.75.

Sellers could come in on the first test of 4200.75, but overtaking it could trigger an acceleration into the resistance cluster at 4299.25 to 4303.50.

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

E-mini S&P 500 Sellers Eyeing Psychological Support at 4000

June E-mini S&P 500 Index futures closed sharply lower on Friday as investors reacted to numerous factors including weak sentiment, a shrinking U.S. economy, high inflation and widely anticipated aggressive Fed rate hikes. Compounding these domestic issues are the COVID-related lockdowns in China and worries surrounding the invasion of neighboring Ukraine.

On Friday, June E-mini S&P 500 Index futures settled at 4127.50, down 156.00 or -3.78%. Additionally, the S&P 500 ETF Trust ETF (SPY) finished at $412.04, down $15.77 or -3.69%.

US Economy:  Contraction in First Quarter, Inflation Jump in March

U.S. Gross Domestic Product (GDP) unexpectedly declined at a 1.4% annualized pace in the first quarter, marking an abrupt reversal for an economy coming off its best performance since 1984, the Commerce Department reported Thursday.

The negative growth rate missed even the subdued Dow Jones estimate of a 1% gain for the quarter, but the initial estimate for Q1 was the worst since the pandemic-induced recession in 2020, according to CNBC.

The weak GDP report was followed on Friday by government inflation data. The core personal consumption expenditures price index, which measures costs that consumers pay across a wide swath of items and accounts for how behavior changes in response to market dynamics, increased 5.2% from a year ago, according to the Bureau of Economic Analysis.

Although the core PCE came in below the 5.3% forecast, including volatile food and energy prices, the PCE index accelerated by 6.6%, the fastest pace since January 1982.

The real problem for the economy showed up in the employment cost index, a separate inflation measure. It increased 1.4% in the first quarter from the previous period, according to the Bureau of Labor Statistics. The Dow Jones estimate for that level was 1.1%.

Daily June E-mini S&P 500 Index

Short-Term Outlook

The main trend is down and the momentum into Friday’s close suggests the benchmark index is headed lower. Investors are clearly looking for a value area, which could provide support, but in this rising interest rate environment, it’s difficult to find one because they don’t know how aggressive the Fed is going to be the rest of the year.

Although the PCE report did show signs of easing inflation, when combined with the inflation increase in the employment cost index, it shows the Fed still has a problem. Consequently, markets widely expect a 50 basis point increase during next week’s Federal Open Market Committee meeting, with additional raises to follow.

The Fed’s job also became more complicated following the weak GDP report. Rising interest rates would help reduce inflation, but they could also cause stagflation, or a period of low growth and surging prices.

If we start the new week with S&P investors leaning to the side of caution, then look for the selling pressure to extend into the May 12, 2021 bottom at 4020.50. If this level fails then the psychological 4000.00 will be next. A break through this level could really bring in the heavy sellers.

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

E-mini S&P 500 Falling Sharply as Investors Struggle to Find Value

June E-mini S&P 500 Index futures are trading sharply lower late in the session on Friday in a move that threatens to take out the low of the year. Sellers are being motivated to liquidate shares by a plunge in Amazon, following a gloomy quarterly report, and the biggest jump in monthly inflation since 2005. Ahead of Friday’s sell-off, gains were already being capped by worries over rising interest rates.

At 16:03 GMT, June E-mini S&P 500 Index futures are at 4122.75, down 160.75 or -3.75%. Meanwhile, the S&P 500 Trust ETF (SPY) settled at $412.04, down $15.77 or -3.69%.

All 11 S&P 500 sector indexes fell, led by a 5.9% slide in Consumer Discretionary and a 4.9% drop in Real Estate. Additionally, the S&P 500 logged its largest one-day decline since June 2020.

In economic news, data showed the personal consumption expenditures price index – the Fed’s favored measure of inflation – shot up 0.9% in March after climbing 0.5% in February.

Daily June E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. Reaffirming the downtrend was the failure to hold this week’s previous low at 4136.75 and the March 15 main bottom at 4129.50. A trade through 4509.00 will change the main trend to up.

The minor trend is also down. A trade through 4303.50 will change the minor trend to up. This will also shift momentum to the upside.

Short-Term Outlook

Buyers keep trying to find value on the charts, but haven’t been able to identify the key area that could stop the price slide. Making the task difficult is the prospect of rising interest rates.

Investors could easily find value when they were aggressively buying the dips when interest rates were trading near zero percent. Now they have to figure out where value exists in an environment that faces a 50-basis point rate hike by the Fed in May and talk of similar moves in June and July. Furthermore, after these aggressive rate hikes, the central bank is likely to raise rates 25-basis point at each meeting until the end of the year.

On top of rising rates, investors are dealing with a first quarter contraction in the economy and surging inflation.

The index is nearing key levels on the chart not seen in over a year. But again those previous bottoms were made when rates were near zero percent, reducing the odds that they will hold a second time. We expect investors to continue to sell the rallies until they can figure out how aggressive the Fed will be, if the economy is truly contracting and if inflation can be tamed. There are just too many negatives hitting the market to be bullish at this time, even if prices appear to be relatively cheap.

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

E-mini S&P 500 Giving Back Earlier Gains Following GDP Miss

June E-mini S&P 500 Index futures are trading higher shortly after the cash market opening, following a strong earnings report from Meta Platforms, as the benchmark index sought to recover from this month’s sell-off.

At 14:28 GMT, the June E-mini S&P 500 Index is trading 4194.75, up 14.50 or +0.35%. The S&P 500 Trust ETF (SPY) is at $418.48, up $1.21 or +0.29%.

Shares of Meta surged about 16% following a beat on earnings, a sign that investors may see signs of relief in the beaten-up tech sector. Shares were down 48% on the year heading into the results.

Better Earnings Driving Market Sentiment

In addition to Meta’s gains, Qualcomm rose more than 8% on the back of strong earnings, while PayPal rose roughly 5% despite issuing weak guidance for the second quarter.

McDonald’s, Merck, Eli Lilly and Southwest were all higher Thursday after their quarterly reports.

On the downside, Caterpillar fell about 5% despite an earnings beat. Teladoc plunged more than 44% after reporting weaker-than-expected results.

Traders Shrug Off US Gross Domestic Product Miss

In economic news, U.S. Gross Domestic Product (GDP) unexpectedly declined in the first quarter by 1.4% from the year prior, compared with the 1% growth expected by economists surveyed by Dow Jones. Some investors brushed off the economic contraction, citing the jump in prices and trade deficit as contributing the most to the decline.

Daily June E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 4136.75 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. A trade through 4303.50 will change the minor trend to up, shifting momentum to the upside.

Daily Swing Chart Technical Forecast

The direction of the June E-mini S&P 500 Index on Thursday is likely to be determined by trader reaction to 4220.00.

Bullish Scenario

A sustained move over 4220.25 will indicate the presence of buyers. Taking out the intraday high at 4258.75 will indicate the buying is getting stronger. If this creates enough upside momentum then look for a surge into the resistance cluster at 4299.25 – 4303.50.

Bearish Scenario

A sustained move under 4220.00 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to extend into 4136.75.

Taking out 4136.75 will indicate the selling pressure is getting stronger. This could trigger a break into the next main bottom at 4129.50, followed by the low of the year at 4094.25.

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

S&P 500: Using Comparison Analysis For An Edge

Multi timeframe, as well as comparison analysis, have many benefits. As traders, we tend to utilize the shorter-term time frames to enter our trades and place our stops. But the BIG money is made from gleaning information from the longer-term charts. We would classify long term as monthly or weekly while short term would be a daily or 4-hour time frame.

Comparison analysis can be done by comparing different time periods or we can see how our market is trading vs another highly correlated market.

Since we have a lot of subscriber interest in stocks, we thought it might be time to compare the current chart of the SPY to the S&P 500 index during the 2002-2009 period. The S&P 500 weekly chart experienced a nice bull market with several buy points from 2002 up to 2007.

S&P’s 2007 top occurred at its 2.0 or 200% extension of its 2002 high vs low. Then about 5-months later sold off a little over -20%. After hitting the key -20% psychological end-of-bull-market area the S&P rallied for several weeks up to its 1.618 overhead resistance. Then after turning back down at the 1.618 the S&P lost approximately -50% of its value. The complete drop occurred over a 17–18-month period from peak to trough.

2002-2009 SPX • S&P 500 Index CFD • Weekly • Tradingview

Comparison analysis SPY

Spy Vulnerable to Another -8% Down Before Staging a Dead-cat Bounce!

The SPY is down approximately -12 to -13% from its peak for 2022. It is feasible the SPY could fall another -8% or reach -20% before it stages some type of rally into late summer or early fall. If this scenario plays out, we should then prepare for what could be a significant drop or bear market in the 4th quarter of 2022 that could extend into 2023 and beyond.

The 2007 top of the S&P 500 index occurred at 2.0 or 200% of its previous major high-low swing low. The 2022 top for the SPY also occurred at 2.1618 or 200% of its Covid high-low swing low.

The potential exists for the SPY to pull back -20% from its peak before staging a temporary rally to a lower distribution top.

2020-2022 SPY • SPDR S&P 500 ETF TRUST • 4-Hour • Tradingview

Comparison analysis SPY

USD Continues to Move Higher

We are now seeing that major economies (US/UK/Japan) are not immune from global deleveraging and inflation. Investors have been seeking safety in the US Dollar and this may eventually trigger a broader and deeper selloff in U.S. stocks. As the USD continues to strengthen corporate profits for US multinationals will begin to disappear.

Especially in times like these, traders must understand where opportunities are and how to turn this knowledge into profits. Part of what we do at www.TheTechnicalTraders.com is to distill price action into technical strategies and modeling systems. These assist us in understanding when opportunities exist in the US stock market and specific sector ETFs. Our core objective is to protect our valuable capital while identifying suitable risk vs reward opportunities for profits in new and emerging trends.

A Canary in the Coal Mine – Berkshire Hathaway

Around 1911, miners would carry canaries into coal mines to give them an advanced warning of danger. This phrase or analogy is also utilized by traders in the financial markets. Our canary or canaries would simply be a market or stock that might give us an indication that there is a problem with the overall market or that the global equity markets are shifting from a bull to a bear.

Berkshire Hathaway BRK.A (NYSE) founded and operated by famed Warren Buffet is a diversified holding company that owns subsidiaries that engage in insurance, freight rail transportation, energy generation, and distribution, services, manufacturing, retailing, banking, and others. It is a good candidate for “a canary in the coal mine”, in our case the stock market.

Berkshire is down approximately -9% from its 2022 peak but remains up +10% year-to-date. BRK’s stock price reached 200% as its shares traded above 2.618 and 2.666 for a few days before selling off. From its Covid low on March 23, 2020, to its 2022 high on March 29, 2022, BRK rallied 2 years and 6 days from trough to peak.

If BRK were to lose -20% from its peak or give back all its 2022 gain in the stock price we should prepare to sell the rally that follows if we have not done so already. Note: TTT subscribers are already safely in cash awaiting trade instructions for select alternative or inverted ETFs.

BRK.A • Berkshire Hathaway INC. • NYSE • Daily • Tradingview

Berkshire Hathaway Chart

Understanding Price Is a Game-changer

Our models continually track price action in a multitude of markets and asset classes as we track global money flow. As our models generate new information about trends or a change in trends, we will communicate these signals expeditiously to our subscribers and to those on our trading newsletter email list.

Successful trading is not limited to when to buy or sell stocks or commodities. Money and risk management play a critical role in becoming a consistently profitable trader. Correct position sizing utilizing stop-loss orders helps preserve your investment capital and allows traders to manage their portfolios according to their desired risk parameters. Additionally, scaling out of positions by taking profits and moving stop-loss orders to breakeven can complement ones’ success.

What Strategies Can Help You Navigate the Current Market Trends?

Learn how we use specific tools to help us understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, we expect very large price swings in the US stock market and other asset classes across the globe.

We believe the markets have begun to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern begin to drive traders/investors into Metals and other safe-havens.

We invite you to join our group of active traders and investors to learn and profit from our three ETF Technical Trading Strategies. We can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com

Chris Vermeulen
Chief Market Strategist
Founder of TheTechnicalTraders.com

E-mini S&P Pressured by Inflation, Economic Growth Worries

June E-mini S&P 500 Index futures are trading lower shortly after the cash market opening on Tuesday, as investors waited to see if earnings from Big Tech companies this week will provide the support needed to stem the current sell-off. The catalysts driving the price action are worries about high inflation and slowing global growth.

At 14:17 GMT, June E-mini S&P 500 Index futures are trading 4231.25, down 61.50 or -1.43%. The S&P 500 Trust ETF (SPY) is at $422.20, down $6.31 or -1.47%.

Of the 102 companies in the S&P 500 that reported earnings through Monday, 77.5% topped analysts’ profit expectations, according to Refinitiv data. In a typical quarter, 66% beat estimates.

Earnings News

United Parcel Service Inc gained 1.9% after it reported a rise in quarterly adjusted profit, while industrial giant 3M Co rose 0.9% after it topped profit estimates.

General Electric Co fell 3.5% after forecasting full-year earnings at the low end of its previous estimate, as persistent supply chain disruptions and rising freight and raw materials costs take a toll on the industrial conglomerate.

US Economic News

Core Durable Goods orders rose 1.1%, beating the forecast and previous read. The Conference Board’s Consumer Confidence report came in at 107.3, lower than the 108.5 forecast, but the previous report was revised higher. Finally, New Home Sales came in at 763K, lower than the estimate. The previous month was revised higher.

Daily June E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 4195.25 will signal a resumption of the downtrend. A move through 4509.00 will change the main trend to up.

The short-term range is 4094.25 to 4631.00. Its retracement zone at 4299.25 to 4362.75 is resistance. The lower or Fibonacci level of this range stopped the buying earlier in the session.

Daily Swing Chart Technical Forecast

The direction of the June E-mini S&P 500 Index into the close on Tuesday will be determined by trader reaction to 4292.75.

Bearish Reaction

A sustained move under 4292.75 will indicate the presence of sellers. Taking out the minor bottom at 4195.25 will indicate the selling pressure is getting stronger. This could trigger an acceleration to the downside with 4129.50 the first downside target, followed by 4094.25.

Bullish Reaction

A sustained move over 4292.75 will signal the presence of buyers. Overtaking the Fibonacci level at 4299.25 will indicate the buying is getting stronger. This could trigger an acceleration to the upside with the main 50% level at 4362.75 the next major target.

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

Combing Through Data – Looking For Clues About Volatility, USD & Stocks

We are now seeing that major economies (US/UK/Japan) are not immune from global deleveraging and inflation. As investors seek safety in the US Dollar this may eventually trigger a broader and deeper selloff in U.S. stocks and market volatility will begin to pick up as the VIXY moves up. As the USD continues to strengthen corporate profits for US multinationals will begin to disappear.

Especially in times like these, traders must understand where opportunities are and how to turn this knowledge into profits. Part of what we do at www.TheTechnicalTraders.com is to distill price action into technical strategies and modeling systems. These assist us in understanding when opportunities exist in the US stock market and specific sector ETFs. Our core objective is to protect capital while identifying suitable opportunities for profits in trends.

Volatility May Have Bottomed Setting the Stage for a Trend Higher

Volatility is beginning to pick up as we see the VIXY moving up strongly from its 6-month base.

Utilizing multiple time frame analysis and then focusing on the 4-hour chart we were able to capture the volatility low earlier than we would have by only using the daily, weekly, or monthly chart.

VIXY – ProShares Trust VIX Short-Term Futures ETF: 4-Hour

Volatility VIXY chart

The USD Is Up Vs All Other Major Currencies

The US Dollar is continuing to appreciate as investors and central banks seek safety from geopolitical, inflation, and other market dislocations. The low in the USD was made on January 6, 2021.

1 Year Relative Performance (USD) – finviz.com

USD relative performance chart

UUP – Invesco DB USD Index Bullish Fund ETF: Daily

USD Index chart

Stocks Meet Resistance and Are Slipping Again!

Stocks hit resistance the first week of 2022 after hitting a Fibonacci iteration of 2.1618. Less than two months later the SPY found support at yet another Fibonacci number of 1.618. These Fibonacci levels are based on the range calculation of the pre-Covid high and the Covid March 2020 low.

However, after rallying from the 1.618 level the SPY rolled over to the downside as it hit a 72-bar (12-day) Bollinger Band using a standard deviation setting of 1.618.

Now we will watch closely to see if the price will make a new low for 2022 which may confirm a shift in the overall trend in stocks.

SPY – SPDR S&P 500 ETF Trust: 4-Hour

SPY trending chart

Inverse ETFs Offer an Alternative to Traditional Buy and Hold

Astute traders who want to do more than liquidate part or all their stock holdings may want to consider investing in an inverted ETF. Inverted ETFs provide the ability to take advantage of a downturn in the stock market without the complexities of having to sell individual stocks short.

If our goal as a trader is to make money, we need to adapt and be as agile as necessary. This is one of the reasons why our team continually tracks global money flow according to each country’s stock index but additionally other types of markets and asset classes. Our quantitative trading research is crucial in determining which markets to trade and how to efficiently employ trading capital.

Since we reviewed the SPY uptrend and the potential for a change of trend to the downside; it’s only appropriate to view the opposite side of this trade by looking at the SH inverted ETF.

SH – Proshares Short S&P 500 ETF: 4-Hour

SH inverted ETF chart

Understanding Price Is a Game-changer

As technical traders, we follow price only, and when a new trend has been confirmed, we change our positions accordingly. We provide our ETF trades to subscribers. Recently, we entered new trades, all of which hit their first profit target levels and then eventually triggered their break-even profit stop loss orders on their remaining position.

After booking our profits we are now safely in cash preparing for our next trades. Our models continually track price action in a multitude of markets and asset classes as we track global money flow. As our models generate new information about trends or a change in trends, we will communicate these signals expeditiously to our subscribers and to those on our trading newsletter email list.

Successful trading is not limited to when to buy or sell stocks or commodities. Money and risk management play a critical role in becoming a consistently profitable trader. Correct position sizing utilizing stop-loss orders helps preserve your investment capital and allows traders to manage their portfolios according to their desired risk parameters. Additionally, scaling out of positions by taking profits and moving stop-loss orders to breakeven can complement ones’ success.

What Strategies Can Help You Navigate the Current Market Trends?

Learn how we use specific tools to help us understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, we expect very large price swings in the US stock market and other asset classes across the globe. We believe the markets have begun to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern begin to drive traders/investors into Metals and other safe-havens.

We invite you to join our group of active traders and investors to learn and profit from our three ETF Technical Trading Strategies. We can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com

Chris Vermeulen
Chief Market Strategist
Founder of TheTechnicalTraders.com

E-mini S&P: Plenty of Room to Downside with 4129.50 Target

June E-mini S&P 500 Index futures are down sharply early Monday as investors reacted to a steep plunge in Asian equity markets. Investors are also bracing for the likelihood of rising interest rates and a slew of earnings this week from major technology companies such as Amazon and Apple.

At 08:15 GMT, June E-mini S&P 500 Index futures are trading 4233.50, down 33.75 or -0.79%. On Friday, the S&P 500 Trust ETF (SPY) settled at $426.09, down $11.97 or -2.73%.

China’s Shenzhen Stocks Off by 6%

U.S. investors are tracking a major slide in mainland Chinese indexes, which are leading losses in the Asia-Pacific region.

The Shenzhen component tumbled 6.08% to 10,379.28 while the Shanghai composite declined 5.13% to 2,928.51.

China has been struggling to contain its worst outbreak of COVID-19 despite harsh lockdowns in its largest city, Shanghai.

In further confirmation of the rapidly spreading disease, Chinese officials in the capital of Beijing are warning that the virus has been spreading undetected for about a week.

Looking Ahead …

S&P investors are bracing for what will be the busiest week yet in corporate earnings season. About 160 companies in the S&P 500 are expected to report earnings this week, and all eyes will be on reports from big tech companies, including Amazon, Apple, Google-parent Alphabet, Meta Platforms and Microsoft.

Daily June E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the intraday low at 4218.50 will signal a resumption of the downtrend. A move through 4509.00 will change the main trend to up.

The short-term range is 4094.25 to 4631.00. The market is currently trading on the weak side of its retracement zone at 4299.25 to 4362.75, making the area resistance.

Daily Swing Chart Technical Forecast

The direction of the June E-mini S&P 500 Index into the close on Monday is likely to be determined by trader reaction to 4267.25.

Bearish Scenario

A sustained move under 4267.25 will indicate the presence of sellers. Taking out 4218.50 will indicate the selling pressure is getting stronger. This could trigger an acceleration into a main bottom at 4129.50, followed by the 2022 low at 4094.25.

Bullish Scenario

A sustained move over 4267.25 will signal the presence of buyers. If this creates enough upside momentum then look for a surge into 4299.25. Overtaking this level will mean the buying is getting stronger with a 50% level at 4262.75 a potential target.

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