Monday's Market Minute: S&P Futures Showing Some Technical Warning Signs

S&P 500 futures have fallen about -2.25% from reaching their yearly highs on Jun. 16, trailing off below an upward trendline that began about a month ago. This move is not particularly significant in terms of the raw number, but various technical indicators are starting to show some degradation as well. 

The Moving Average Convergence-Divergence (MACD) indicator, which measures momentum, is in the process of making a bearish crossover today. A different momentum indicator known as the Relative Strength Index (RSI) crossed out of the overbought area last week, which is another bearish signal. The Parabolic SAR (a study that traders use to identify trend direction and help choose stop-loss points) had a bearish crossover last week. Finally, the Average Directional Index (ADX) that helps measure the strength of the trend peaked just after the yearly highs and is now starting to trend downward, which is another warning sign.

For potential support, watch for where the /ES opened on Jun. 12 after the contract rollover event around 4,350 to provide some solid ground, with the 21-day Exponential Moving Average just below that near 4,343. Beyond that, the previous yearly high close roughly aligns with where the contract closed before the rollover event around 4,310, so that could be another spot for traders to watch. For potential resistance, watch the now-broken trendline, which would come in around 4,420 with today’s trading and then the old high close near 4,467.

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