Friday's Market Minute: Equities Surge As /ES Approaches Resistance

S&P 500 futures have gained about 7.5% in only 15 trading days as of yesterday’s close, and the contract today is on pace for its seventh green candle in a row. The sharp push to the upside has likely confounded bearish traders, and there is little relief in sight for this crowd from a technical perspective. The /ES made fresh yearly highs yesterday, major moving averages are still trending upward, and volume has been above its 50-day simple moving average for the past eight days. 

Momentum still favors the bulls as well. The Relative Strength Index (a measure of the speed and momentum of price change) is firmly in the overbought area, which is typically regarded as a sign of strength. A cross back below this threshold, which is the 70 mark, would be a bearish signal for which to watch. Another sign of a looming slowdown would be bearish divergence, which would be price continuing to make new highs while RSI starts to fade. This would suggest crumbling momentum and could be a precursor to a pullback. 

Look for potential resistance at the yearly +2 Standard Deviation Channel, which currently comes in near 4,509. This study measures standard deviations from a Linear Regression Line and can help determine how extreme the price move is relative to its recent history. These channels also can serve as guidelines for possible support and resistance, so look for support near the +1 Standard Deviation Channel around 4,336.

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