The S&P500 Futures Nudge Higher As Risk Appetite Sticks

The S&P500 Futures (CME: ES) closed a third consecutive week in the green, taking the index within its nine-month high. Risk appetite has driven stocks higher, with tech giants taking the lead. According to Refinitiv, in the seven days to May 31, $1.08B flowed into tech stocks, making it a fourth consecutive week of net buying.  

Helping boost the index from a fundamental perspective was a moderating U.S. economy that showed some signs of cooling in the manufacturing and services sectors. Traders are now pricing a 77% chance of a Fed rate pause in the upcoming meeting as cooling in the economy likely calls for a less restrictive monetary approach.  

Technische Analyse 

The S&P500 Futures have ridden on the back of bulls for the past few weeks. Structurally, price action was sent into an ascending channel pattern, with the 100-day moving average acting as a dynamic support level to the price. A high volume breakout above the 4225.00 level now acts as support after the resistant property of the level was undone. Resistance was established at the 4321.75 level and is likely a potential point of interest for bullish traders at the front row of price action.  

If upside volumes support, a breakout above the 4305.75 level, where upside price action stalled, could validate a move higher, with the 4321.75 level potentially coming into play. In contrast, if bearish traders attempt to outdo bulls, a retracement could unfold. The 61.80% Fibonacci Retracement Golden Ratio at the 4225.00 level, which coincides with the bullish breakout point, could be a potential point of interest in a bear case.  


With the U.S. Services PMI coming in lower than expected, traders will likely position themselves for a rate pause. The S&P500 Futures could find less friction to the upside as equity valuations benefit from avoiding higher borrowing costs which weigh on earnings. The 4321.75 level will probably come into play.  

Sources: Institute for Supply Management, Nasdaq, Reuters, TradingView