U.S. Session Morning Brief: Key S&P 500 Support Levels

Is the bull run in U.S. equities over? Chances are no, but currently, there is a double top formation in the December E-mini S&P 500 futures market. If we do see some momentary weakness from the S&Ps, there are some key support levels that we can trade to the downside.

There are many ways to trade U.S. equities. CFDs, futures, and even the traditional buy-and-hold approach to individual stocks are viable methods. By far, the most popular derivatives instrument in the U.S. market is the E-mini S&P 500 futures.

If you are a futures trader, then the E-minis are worth investigating. If not, many of the same technical principles I outline below apply to the S&P 500 CFD products.

Technicals

Monday’s session was relatively quiet, producing rangebound markets across many asset classes. For the S&P 500, the session produced a Doji candlestick formation.

December E-mini S&P 500 Futures, Daily Chart

Below are a few key support and resistance levels (rounded to the nearest quarter-point):

• A double top is present at 2550.50-2550.75.

• The 38% retracement of the current bull run is 2528.75.

• The 50% retracement of the current bull run is 2521.75.

• 20 Day EMA is currently 2517.00.

An important characteristic of this market is that the 20 Day EMA, Bollinger Band MP, and Daily SMA are running parallel to one another. This is an extremely bullish signal, and indicative of what we have seen from this market over the past month.

Bottom Line: I am firmly in the bullish camp when it comes to U.S. equities. Until we see a fundamental change in the market dynamic, the U.S. indices should remain strong.

For today, I will be buying pullbacks in the December E-mini S&P 500 futures contract. In the event that we see heavy selling on the U.S. cash open, a purchase of the 38% level at 2528.75 is a good area to take a position long. 1/1 R/R, with the initial stop below the 50% retracement at 2521.75 is optimal trade location.

As always, trade smart and for tomorrow!