The S&P 500 mini futures (ESM5) got slammed overnight, dropping almost 20 points in the pre-market and immediately after the open Tuesday (Apr. 14). But by 10 a.m., it had recovered and marched steadily up for the rest of the day to close at 2091, near the high of the day, and five points above the previous close. Nothing very awe-inspiring, but a win is a win, no matter how slender.
The wedge pattern we’ve been discussing all week is still intact (See chart below.). In effect, the rally has stalled at the “D” top, but the retracement has stalled at the converging 20- and 40-day moving average lines.
We think one or the other of those boundaries is likely to be broken soon, either today or tomorrow. If we had to guess, we’d say an upside break-out. Fortunately we don’t have to guess; we can trade this by waiting for the market to declare a direction, and then climbing on board.
Today, and for the rest of this week, traders will be watching the earnings reports, and overnight markets may react to the announcement of GDP results from China, which were dismal. That may slow the rally in US equities somewhat.
Today, a move above 2098.50 will be bullish and could push the minis up to challenge March’s high area. A break below yesterday’s low in the 2075 area could push price down toward 2065-60 zone.
The daily 20- and 40-EMA lines will be important again today. As long as they hold up, the odds favor the upside and the ES is likely to move to a higher level.
- Major support levels: 2062.50-64.50, 2055-56.50, 2045-43.25
- Major resistance levels: 2100-2099.50, 2107.50-08.50, 2117.25-21.50
ESM5 Daily Chart – Apr. 14, 2015