S&P 500 Futures: Time for a Rally?
ES Daily (S&P 500 E-mini Futures)
S&P 500 futures appear to be at a tradeable inflection point after all major US indices registered semi-valid "hammer" candlestick patterns on the 4/25 session — suggesting a short-term swing low may be in place. Conversely, failure to immediately head higher over the next few sessions would imply that early February/April lows down at 2,550 may be re-tested within 8-10 sessions.
VIX & S&P 500
It is worth noting that a similar setup across both S&P 500 Cash Index and VIX on 2/9/18 coincided with a short-term bottom and led to a strong month-long rally.
Our Super MACD and Super RSI (modern improvements upon classic MACD and RSI indicators) show an interesting setup that mirrors the recent top where price action failed just short of 2,720.
On 4/13 the Super RSI crossed above its overbought level, but the Super MACD did not follow suit. Price action continued to move higher until both indicators registered values above their respective overbought levels, which coincided with an important swing high. This is classical technical analysis; about as KISS as one can get.
We see the opposite pattern now: on 4/22 the Super RSI was below its oversold level but the Super MACD did not confirm that price was truly oversold. Upon market close 4/25, these indicators appear to be reversing their slopes while in oversold territory -- which has significant likelihood to mark a swing low.
A move higher faces strong initial resistance at 2,700 - 2,720, whereby price action would likely require 1-3 tests of 2,720 to soften overhead resistance while also plotting a series of explicitly higher lows. If price action eventually breaks higher, round number 2,800 (3% above 2,720) is where ES will find its next battle with resistance.
The NASDAQ remains central to risk-on speculation for traders and investors alike. Weak-moderate resistance at NQ 6,700 and strong resistance surrounding 6,850 will provide initial upside speed-bumps … should price break higher from there, resistance surrounding 7,000 will prove formidable.
VIX Daily (CBOE Volatility Index)
The VIX seems to be settling into a rangebound zone of 15-26 since blasting off on 2/02/18. Pivoting up with a swing low on 4/17, the VIX just missed grabbing the 20.00 level before turning back down over the course of the 4/25 session. Which brings us to the 4/25 daily candle – a nearly picture-perfect shooting star. This bearish candlestick pattern complements its bullish counterpart (the hammer) that nearly registered across all US index futures, which strongly suggests that it is time for a rally. So where do we go from here?
Any sustained equity rally is likely to send VIX back down towards the 15.00 level, which has acted as impenetrable support on multiple occasions since equity volatility returned in February.
Noting a series of successively higher swing lows dating back to early January … VIX 15, ES 2700, NQ 6700 appears to be lining up.