Thursday's Market Minute: S&P Futures Near Key Support After Tuesday's Tumble

S&P 500 futures are near a potentially important line in the sand after Tuesday’s -4.3% rout erased much of a big four-day surge upward, dashing bulls’ hopes for a something more than a mere relief rally. 

Technical evidence suggests the market is still trending downward as the /ES continues to make lower highs since the Aug. 16 peak. The 252-day Exponential Moving Average has twice served as a point of resistance during the past month, and major moving averages themselves are sloping downward, which suggests a broader weakness in the overall trend. The contract also is now trading below the yearly Linear Regression Line (a line of best fit based on closing prices and used to identify “fair value”), which is another sign of weakness.

The 3,900 level will be key to watch going forward, as this represented a significant bottom in May as well the bottom from earlier this month. This is also roughly in confluence with an upward sloping trendline beginning with the June lows near 3,639. To the upside, watch the 21-EMA near 4,038. 

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