Thursday's Market Minute: S&P Futures Could Be Near A Critical Breaking Point

Thursday's Market Minute: S&P Futures Could Be Near A Critical Breaking Point

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Stock indexes look like they could be in for another rough session with S&P 500 futures trading down around -1.5% in the overnight session. The bears have had the upper hand lately as the /ES has trended downward since March 29, falling more than -15% as of yesterday’s close.

The contract plummeted -4.3% yesterday alone after a hard rejection at the confluence of the downward trendline from the highs and the -2 Standard Deviation Channel near 4,090.
The recent price action in the /ES has been choppy to say the least, but in the broader sense this downward move has also been fast and extreme relative to its own history. Consider that the yearly Linear Regression Line (a line of best fit based on closing prices used to give an idea of “fair value”) is now near 4,445.

Price now is roughly -3 standard deviations from this point, while the Linear Regression Channel shows we are now at farthest point from “fair value” that we’ve been at during the past year. 
One critical level to watch is the yearly lows near 3,855. The /ES traded as low as 3,856 in the overnight session, so be on your guard if price breaks lower as this could open the floodgates for more selling.

Prices could move quickly, as the three-year Volume Profile shows thinner trading to the downside. Potential support could lie at the lower line of the downward channel near 3,750, while resistance may be found at the 21-Day Exponential Moving Average near 4,100.

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