E-mini S&P 500 Index (ES) Futures Technical Analysis – Needs to Hold 3702.00 to Sustain Upside Momentum

December E-mini S&P 500 Index futures are edging higher on Wednesday during the pre-market session. Meanwhile, the cash S&P 500 Index is set to open at a record high as hopes for a vaccine-linked economic recovery and more domestic fiscal stimulus sparked demand for economically sensitive stocks such as banks and industrials.

At 13:46 GMT, December E-mini S&P 500 Index futures are trading 3707.50, up 5.50 or +0.15%.

Major U.S. banks Citigroup and Wells Fargo gained half a percent before the bell, while industrial bellwether Boeing Co climbed 1.1%.

Travel stocks, which have been battered by the COVID-19 pandemic, also clocked sharp gains. American Airlines Group Inc and United Airlines Holdings Inc jumped 3.9% and 1.5%.

Daily December E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when buyers took out yesterday’s high. However, the follow-through rally was weak.

A trade through the intraday high at 3714.75 will signal a resumption of the uptrend. The main trend changes to down on a move through 3225.00.

The minor trend is also up. The minor trend will change to down on a break through 3664.25. This will shift momentum to the downside.

The first minor range is 3664.25 to 3714.75. Its 50% level at 3689.50 is the first downside target.

The second minor range is 3592.25 to 3714.75. Its 50% level at 3653.50 is another potential target.

The third minor range is 3542.25 to 3714.75. Its 50% level at 3628.50 is a third target level.

Daily Swing Chart Technical Forecast

The direction of the December E-mini S&P 500 Index on Wednesday is likely to be determined by trader reaction to 3702.00.

Bullish Scenario

A sustained move over 3702.00 will indicate the presence of buyers. Taking out 3714.75 will indicate the buying is getting stronger. We could see an acceleration to the upside if there is a burst in volume.

Bearish Scenario

A sustained move under 3702.00 will signal the presence of sellers. This could trigger the start of a labored break with potential downside targets lined up at 3689.50, 3664.25, 3653.50 and 3628.50.

The selling could start to pick up if 3628.50 fails.

Side Notes

Although the market is posting new all-time highs, I’m a little concerned about the gains from high to high. Traders have been buying minor dips, but shying away from buying strength. This suggests an overbought market.

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.