S&P 500 Mid-Week Technical View

This article was originally published on Nadex.com.

Monday’s historic sell-off in equity futures left us with a “wait-and-see” attitude yesterday, letting another day play out before approaching a technical view of the S&P 500 futures.

Today we will break down some key levels in this market.  However, first, we will say that the 7 rules for trading these markets that we posted yesterday are still in effect.  We enter the day with a broader bullish bias since every dip in this market has been bought for the last nine years. However, in the very short-term, we come into today’s trade neutral, ready to change sides quickly depending on what the market tells us.

Our short-term technical view will use the thirty-minute candlestick chart below, which goes back to last Thursday

First, we will look at a few targets to the downside.  Currently, the ESH18 is trading at the 2683 area.  Just below are the 2017 close at 2668.25 and the 2018 open at 2675.00.  The range between these two prices is represented by the orange shaded bar on the chart. If price breaks below these levels today, then we would look for a trade possibly back down to the 2623.75 area from yesterday’s low. If that level fails, then the next targets would likely be the 2601.75 open from Tuesday, and then the 2529 overnight low of Tuesday’s session.

 

 

To the upside, the price is about to do business with the green trend line, currently at 2694. This is not a major trend line for us, but we do see it as a relevant test for bulls.  If this level is broken, then the target would become the 2703.75 price line shown in red, which marks the 50% retracement from last week’s 2878.50 all-time high to this week’s 2529 low.

If bulls manage to rise above those levels, then the target would become the blue shaded region of the chart.  The bottom of that blue zone represents Monday’s regular session open at 2739.25, while the top of the zone is the 2764.00 high from Monday’s session, which is also this week’s high.

Once this market returns to Monday morning’s range, bears will be left with their last line of defense before risking a total loss to all their victories this week, while bulls will look to take charge and attack last week’s levels.

This is a very broad view of this market - necessarily so due to the volatility the last three days.  With 10-handle moves in just moments, too precise of a view is impractical at this time.

Today’s economic calendar includes four Fed speakers scattered throughout the day, three minor reports, and a U.S. Treasury event.

  • Robert Kaplan Speaks 6:00 AM ET
  • MBA Mortgage Applications 7:00 AM ET
  • William Dudley Speaks 8:30 AM ET
  • EIA Petroleum Status Report 10:30 AM ET
  • Charles Evans Speaks 11:15 AM ET
  • 10-Yr Note Auction 1:00 PM ET
  • Consumer Credit 3:00 PM ET
  • John Williams Speaks 5:20 PM ET

 

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