Current Technical Setups on the E-Mini S&P

06/29/2010 12:01 am EST

Focus: FUTURES

The latest minor trend in the E-mini points to a downward reversal on June 21, so the short-term trend is lower. Things get a little more complicated when you are looking at the bigger picture and trying to figure out whether this market is going to make another leg lower or continue with the trend line breakout to the upside.


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This is where trading skills are very important. It is likely that the technical picture could evolve multiple times before we get a clear movement. Steadfastly sticking to an opinion even though the technicals change in a new direction is a recipe for eventual losses. 

The low volume on the recent rally tells me there is not much interest on the upside. However, this market is no stranger to rallying on low volume. The market did put in a double bottom around 1035 and rejected the flash crash lows. This is a positive for the market, and we could have a very big test coming up. 

There will be a buy signal if the market tests the 1035 level again. This area is the double-bottom lows and a throwback to the trend line where it had a breakout a couple weeks ago. The market should bounce at this level if it gets down there relatively shortly. There is also another possibility that the market could hold above this area and form a 1-2-3 and move higher. 

So, how does one trade this market? It all depends on your time frame and risk tolerance. For those with long bias, it may be wise to wait for a buying opportunity around the 1035 area. For those with a short preference, a break below the 1035 area should lead to another wave of selling. 

Remember to control your risk. This market could continue into a consolidation for an extended period with multiple false breakout signals. There is also a possibility that volatility could increase significantly on a break lower. I like the idea of buying around the 1035 level and reversing to a short position if support doesn’t hold.

By Chuck Kowalski of FuturesBlog.com

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