Thursday's Market Minute: Earnings Outlook: S&P Futures Slip As Technicals Turn Over

S&P 500 futures saw a 1.8% slide during the last two days, as Tuesday and Wednesday’s downward price action on heavy volume was like a bucket of ice water on a sleepy summer market. All the gains of the lethargic grind upward during the past few weeks were wiped away, but the /ES was still up about 38% since its one-year lows in September as of yesterday’s close.
The contract closed below its 21-day Exponential Moving Average yesterday and other indicators including the MACD and Parabolic SAR saw bearish turnovers this week. The RSI showed a break in bullish momentum as the indicator stopped short at the overbought level yesterday. If this sell-off continues, the 4310 to 4340 area is a potential technical support zone as it contains the 50-day Simple Moving Average, the 63-day EMA, and the lower Linear Regression 50% channel line.
Today it will be crucial to see if traders hold the line near the 4375 area, as it is roughly the July highs and the bottom edge of the range-bound trading we saw heading into August. The buy-the-dip strategy has often paid off for bulls, but be cautious; all it takes is that one time when it doesn’t work out to blow up an account.

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