Yahoo Finance E-mini S&P 500 Index (ES) Futures Technical Analysis – May Have Closed Higher, but Buying Was Weak
September E-mini S&P 500 Index futures settled higher on Thursday ahead of the long U.S. holiday weekend on the back of an impressive Non-Farm Payrolls report. However, a drop in U.S. Treasury yields led investors to increase doubts on the longevity of nonfarm payrolls gains amid persistent unemployment claims and a spike in coronavirus cases.
On Thursday, September E-mini S&P 500 Index futures settled at 3129.00.
Stock market investors at first applauded a decline in the national unemployment rate, which dropped to 11.1% from 13.3% in May. But lingering pessimism over elevated unemployment claims later eclipsed investor optimism over the June payrolls numbers, leading to a pullback from highs into the close.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Thursday when buyers took out the previous main top at 3145.75. A trade through 2983.50 will change the main trend to down.
The minor range is 3220.50 to 2923.75. Its retracement zone at 3072.00 is controlling the near-term direction of the market. Closing above this level makes it support.
The second minor range is 2751.50 to 3220.50. Its 50% level is also support. This level stopped the selling at 2983.50 on June 29.
The major support is the long-term Fibonacci level at 2926.25.
Short-Term Outlook
Investors aren’t too concerned about the actual rise in COVID-19 cases. The overall market tends to be immune to things like sickness and death. But there are growing worries that the rise in infections will lead to new restrictions, lockdowns and layoffs.
The drop in the unemployment rate is nice, but it represents stale data. If the Weekly Unemployment Claims continue to rise then it is likely that the June reading of 11.1% will be the lowest we see for at least a couple of months. This is likely to be bearish on stocks.
If people are out of work then they can’t spend. If they can’t spend then companies can’t earn. And if they can’t earn then stocks will likely fall to reflect the drop in earnings.
Basically, increasing signs of a second-wave of coronavirus infections coupled with higher unemployment and slower growth are likely to weigh on the benchmark index.
Technically, the lack of follow-through to the upside on Thursday when buyers took out 3145.75 and 3157.25 was the first sign of selling pressure. The second was the close below these levels.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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