The S&P 500 futures (ES) fell and then recaptured some losses yesterday, only to give them back in premarket.
FOMC next week, Euro markets settling in to stimulus environments, and low holiday volume all giving the markets a decidedly unresolved flavor. This is NOT a place for swing trading for sure. Buyers continue to exercise control in perceived value areas.
Short term S&P 500 support levels begin near the 2060 mark; and wide resistance levels near 2095.25. We should also be keeping an eye on how the participants react to a test of the 2083-2085 area. Momentum readings are neutral. Breaches on either side of those levels should test and return to their breach levels before continuation. Steep pullbacks remain buy zones. Watch for the lower highs as a tell tale sign of exhaustion. (We have those right now, but watching for lower support levels to firm up)
Shorter time frame momentum indicators are neutral and falling, and lower than Monday. Longer cycles are flattening, divergent, but still in bullish territory, and the price action and key S&P 500 support levels are holding thus far.
See today’s economic calendar with a rundown of releases.
Be sure to visit me this Thursday with @Schwab4Traders – you can register here.
RANGE OF TUESDAY’S MOTION
Crude Oil (CL_F)
Oil cascaded into and below August lows, then began to stabilize near 37.5. It then attempted a relief bounce into resistance. Though there are many moving parts here in the big oil picture, as intraday traders, we need not be concerned with them in order to trade with efficiency. Simply look first at support and resistance, assess overall momentum and trend, and act upon price confirmation and market structure.
Support sits at 37.50 at this time, while resistance lies near 38.6. For an intraday trading formation, we see a range event between these levels noted, noting that momentum and trend are bearish but that we are a potential short term inflection point (turning point). Big oil traders remain skittish. Above a 38.7 retest sends us near 39.6, then 39.8 and 40.1. I suspect this important level 40 fails at first pass but its recovery will provide a bigger tell, in the longer term. Below a 37.5 retest sends us to 37.33, 37.14, 36.87, and perhaps 36.7. If we fail these levels (which I doubt we do in short order), we will test the 35.8 -35.9 region. Momentum on short time frames is negative. See premium blog for tighter levels.
E-mini S&P Futures (ES_F)
Chart With Still Active S&P 500 Trading Levels
Notice that the rangebound behavior of the market essentially shows us unchanged since mid-late October.
Upside motion is best setup on a bounce off S&P 500 support levels beginning with 2075, or a retest of 2084.75 after a breakout. A hold of 2074.75 should deliver 2078.25, 2079.75, then 2081.25, 2083.75.
Downside motion below the failed retest of 2073, or at the failure to hold 2078 opens a short (watch momentum on tight time frames- that would be an aggressive short). Retracement into lower levels from 2078 gives us the targets at 2075.5, 2072.5, 2068.25, then 2065.5, 2061.5, and 2059.5.
If you’re interested in the live trading room, it is now primarily futures content, though we do track heavily traded stocks and their likely daily trajectories as well – we begin at 9am with a morning report and likely chart movements along with trade setups for the day.
As long as a trader keeps is aware of support and resistance levels, risk can be very adequately managed to play in either direction as bottom picking remains a behavior pattern that is developing with value buyers and speculative traders.
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.