U.S. Equities Rout Continues, S&P 500 Support Levels

Fallout from the cancellation of the June U.S./North Korea summit continues. U.S. indices have extended losses from the open, with the DJIA falling more than 200 points and the S&P 500 15. It is anyone’s guess where the markets will close for the day, but the first 120 minutes have been dominated by bearish sentiment. Can the indices post a mid-session rally?

Today’s Numbers

Aside from the big news coming out of the White House, there were several U.S. economic releases from earlier:

Event                                                                Actual              Projected

Continuing Jobless Claims (May 11)               1.741M                  1.754M

Initial Jobless Claims (May 18)                        234K                       220K

Existing Home Sales (MoM, April)                  5.46M                    5.57M

Existing Home Sales Change (MoM, April)   -2.5%                       -0.2%

The headliner of this group is the lagging Existing Home Sales statistics for April. The late Spring/Summer of 2018 has been projected to be one of the strongest for U.S. real estate in recent memory. A drop of -2.5% for April is a sign of limited supply and shrinking mortgage availability.  As the FED continues on its path of quantitative tightening, look for further reductions in mortgage availability.

S&P 500 Technicals

June E-mini S&P 500 futures opened the week with a “bullish gap.” Since then, price has filled in the gap and entered rotation near 2725.00.

Today has been a brutal one for S&P bulls, with values trending south since the cash open at 9:30 AM EST. At press time, this market is attempting to rally, with price well off of intrasession lows (2705.75).

Here are the support levels to watch for the remainder of the session:

• Support(1): Bollinger MP, 2697.00
• Support(2): 38% Current Wave, 2684.25
• Support(3): Daily SMA, 2670.00

Overview: For now, buyers have dug their heels in just above the 2705.00 level in June E-mini S&P 500 futures. If this area is taken out, look for a test of the downside support levels.

Trading a charged news cycle is always a challenge. Participation is heavy and any geopolitical news item that comes across the wires may drive the S&P 500 directionally. In my mind, the key level for the rest of the week is the 38% retracement of the current wave at 2684.25. This level provides a great entry for a long and may come into play by Friday’s close.

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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