Elevated volatility has continued this week, with the S&P 500 futures currently trading at the 2643 area. Technical and fundamental factors can point to either side of this market over the next couple of days; but given the climate, we prefer not to take a bias, but instead to identify relevant levels in both directions. Using the chart below, we will examine the relevant technical view for the next few sessions.
The ESH18 made a higher high and higher low yesterday on a day-to-day basis and is currently trading in a narrow range.
We will look first at the upside. The next relevant area above current price is the yellow trend line currently at 2656, which connects a series of lower highs from last week.
If bulls break above this line, then the first upper target would be yesterday’s high of 2671.50 marked by the blue price line, with the black minor trend line at 2644.75 being the only price we see standing in the way.
Above that blue price line, the next target would be last Thursday’s high of 2686.50 marked in green, and if that level breaks, then last Wednesday’s high of 2726.75 marked in orange would become the weekly target. As long as this market continues to make higher lows and higher highs on this thirty-minute candle chart, we would want to be buyers.
However, if bears put together lower highs from here, then it would be logical to look for lower lows. This means that the minor pink trend line at 2636.50 must be broken first, which leads to a target of yesterday’s low marked in red at 2620.
The area from 2620 to 2618 would be the last line of defense for bulls lest they lose this market to another sell-off. If that occurs, we anticipate price moving down to the grey shaded band from 2574.50 to 2579.00. If bulls cannot hold that area, then we would target last week’s double-bottom low at the 2529 to 2531.50 area, marked by the narrow gray band at the bottom of the chart.
Today’s economic calendar is light, including two minor reports and two Fed speakers. However, Wednesday’s schedule features two major reports at 8:30 a.m. EST in addition to four minor releases.
NFIB Small Business Optimism Index 6:00 AM ET
Loretta Mester Speaks 8:00 AM ET
Redbook 8:55 AM ET
4-Week Bill Auction 11:30 AM ET
MBA Mortgage Applications 7:00 AM ET
Consumer Price Index 8:30 AM ET
Retail Sales 8:30 AM ET
Atlanta Fed Business Inflation Expectations 10:00 AM ET
Business Inventories 10:00 AM ET
EIA Petroleum Status Report 10:30 AM ET