S&P 500 Index Futures Trading Analysis: Bearish (Tuesday December 3)

STOCK MARKET COMMENTARY

Upward motion on S&P 500 Index futures is stalling out and a drift to support levels is taking control of the landscape this morning.

News of tariffs on other countries and weak manufacturing growth numbers permeate the news streams.

Australia is the one holdout as trade holds steady with China. In an unusual move, traders did not buy the dip to bring markets back after yesterday’s fade.

Traders may continue the quiet grind to the north as we wait for economic releases at the end of the week if we stabilize the price fade near 3084.

Broad patterns still show higher lows holding on S&P 500 futures (but that could change in short order – eyes on support levels). Holding these support edges will be critical as traders are still generally skittish and algorithms continue to take charge of motion based on news headlines.

THE WEEKLY PRICE ACTION

A break in the positive price action has given back more than 50 points on the $ES_F (mini S&P 500 Index futures) and 500 points on $YM_F (mini Dow Jones Industrials futures). Positive momentum is weakening but holding from a larger time frame. For the first time in seven weeks, shorts taken into the prior day and into the overnight would have yielded positive returns.

This may be a slight shake out – or the start of something bigger. At this juncture, it is reasonable to assume that buyers will try to tow the line and lift prices higher. The failure to close above 3082 today will send the message that more downside is ahead. 

COMMODITY & CURRENCY WATCH

Gold sits at the top of its recent range near 1475. We need to hold that breakout as traders have had prior trouble in this region. The current range seems to present as 1443-1475 – with some signal of a breakout looming.

The US dollar sits below 98 but in a congested support zone after a choppy downward day. Price resistance so far has been strong at 98.7 with 98.4 just below. Support is near 97 for now and holding. WTI remains widely range bound. Support sits regions between 55.2 and 56.12. Resistance levels sit near 58.42 to 60.6. OPEC has signaled the possibility of more cuts ahead.

TRADING VIEW & ACTION PLAN

Bearish drive down into key support regions near 3096-3084 in progress. Buyers will attempt to engage here but a failure to recapture 3119 will be signs of continued supply pushing prices down. Broadly speaking, buyers have the advantage as long as we hold 3126 – and we are quite below that level. The support below that is 3074ish, so the loss of 3089 opens that level as a target.  

Be patient and wait for your setups – this means we wait for key support to engage, and we don’t step in front of moves. Understand what your levels mean and prepare for the potential behavior at those levels. Realize that we could bounce higher than anticipated and fade deeper than anticipated before returning to the trend and range – Follow the trend in the shorter time frames and watch the price action.

The theme of INTRADAY motion is:

POSITIVE AS LONG AS WE HOLD ABOVE 3119ish today (with big spikes likely fading back into congestion)

CHOPPY BETWEEN 3117 AND 3097

NEGATIVE AS LONG AS WE HOLD BELOW 3094ish today (with sharp bounces failing and deep pullbacks holding)– choppy inside the range.

Do what’s working (that means follow short trend and momentum signals while in the intraday spaces) and watch for weakness to develop away from your trade direction in order to leave.

Learn more about my services over at The Trading Book site.

Twitter: @AnneMarieTrades

The author trades stock market futures every day and may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

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