Thursday's Market Minute: S&P Futures Faltering As Price Dips Below Key Level

S&P 500 futures continue to slide downward from the 52-week highs of 4,634.50 on Jun. 27, and now are down about -6% from that point as traders gear up for a major round of earnings reports during the next couple of weeks. However, the /ES presents something of a mixed picture, as situation has improved since the last leg down but price is also breaking below a noteworthy area.

The /ES has recovered somewhat after falling more than -7% from the highs on Sep. 14 to the low point of Oct. 4. From there, the contract tested the 252-day Exponential Moving Average in the early days of October and held firm, sparking a rebound that propelled the contract upward once again. But commonly followed moving averages such as these can be double-edged swords; they can be a source of support during downtrends, but they can also act as resistance during uptrends. 

This time, the 63-day EMA was a ceiling near approximately 4,410 that the bulls couldn’t manage to crack with any degree of strength. Now, price is faltering once more as it slipped below the 21-day EMA and also closed below an important area around 4,350. This point was significant because it’s where trading opened up after a gap up due to a contract change in June, and since then has been a point of both support and resistance. 

The yearly Volume Profile study helps highlight some key areas of heavy trading that could serve as support or resistance, namely around 4,300 to the downside. To the upside, the volume node centered around about 4,420 also is in confluence with the 63-day EMA, making it an even more important area for the bulls to breach. The 252-day EMA and the 200-day Simple Moving Average happen to be quite close to each other at about 4,266 and 4,256, respectively, so this could be a key support area if price continues to wane.

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