S&P Futures Hit Fresh All-Time Highs

S&P 500 futures hit new all-time highs of 5,343.50 during the overnight session and appear to be hanging on to the gains in early trading. The /ES has enjoyed a strong upside move of about +5.8% from the recent lows on May 1 to yesterday’s close, with 10 green candles during the past 11 trading days. Yesterday’s rally was spurred on by economic data like the Consumer Price Index, which was in line with expectations, and resulted in a +1.1% gain on the day.

The /ES has moved above most commonly-followed moving averages, so now it may make sense to keep an eye on shorter-term moving averages such as the 9-day Exponential Moving Average. Watch out for when price closes below this moving average, and for when the moving average starts to trend downward, as both situations could signify a potential trend change. Another thing to watch is the Relative Strength Index (also known as RSI) for a reading on momentum. The RSI ranges from 0 to 100, with the 30 level representing oversold conditions and the 70 level representing overbought. Somewhat counterintuitively, a push above the 70 level during a trending market typically is regarded as a sign of strength and further bullishness to come. RSI is currently just below this level, so look out for this bullish signal to develop.

When a financial product is making new all-time highs, it can be difficult to assess potential resistance because there’s no prior price action to examine, but yearly Standard Deviation Channels can help with this issue. This study creates a Linear Regression Line (line of best fit based on closing prices) and then creates channels based on standard deviations from that line. The +1 SDC comes in around 5,554, or about +4% above current price. To the downside, the same Linear Regression Line could come into play again as support. This line is in confluence with the 21-day Exponential Moving Average, and both come together around 5,207 for a potentially supportive area. Before that, the 9-day EMA comes in near 5,257 as another area to watch for price to find a foothold.