Fundamental Analysis Technical Analysis

Equity Futures Retreat, Essential ES Technical Trades

U.S. stock index futures fell on Friday morning amid heightened tensions in the Middle East and a disappointing revenue forecast from Netflix. An Israeli attack on Iranian soil escalated concerns over regional stability. The CBOE Volatility Index climbed to its highest level in over five months as well as markets digested the news.

s&p 500 futures ES daily chart with RSI

Dow e-minis, S&P 500 e-minis, and Nasdaq 100 e-minis were all down, indicating a potential continuation of the recent downward trend in U.S. equities. The S&P 500 and the Nasdaq had already closed lower for the fifth consecutive session on Thursday.

Federal Reserve policymakers are leaning towards maintaining current borrowing costs, possibly well into the year, as inflation shows slow progress and the U.S. economy remains resilient. Money markets are now pricing in approximately 40 basis points of reductions, a significant decrease from the 150 basis points anticipated at the start of 2024.

NQ futures daily chart with RSI and moving average indicator

S&P 500 Futures (ES) Technical Analysis

ES has been in a strong uptrend, making a series of higher highs and higher lows since mid-March. Price recently broke out above the previous high around 4590 in mid-April and has continued advancing to new highs, confirming the bullish momentum. The 100-day moving average is rising, and the price is testing it as geopolitical tensions rise. Bulls will be hoping prices can see support here and that tensions across the world do not escalate further.

Trade opportunities:

  • Look to buy on any dips back to the 4900-5000 support zone and 100 day MA, with a stop below 4850 and targets at 5075 and 5100+.
  • A breakout trade above 5075 could also be considered, with an initial target of 5150.

Overall, the chart remains bullish but our eyes are fixated on geopolitical tensions which is why we need to be very cautious on the positions we take because volatility means we could see whipsaws all over.