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S&P 500 INDEX POISED TO FOLLOW FUTURES' PREMARKET FLOURISH

E-mini S&P 500 futures EScv1 are popping more than 20 points, or around 0.5% in premarket trade, as investors cheer rate cut prospects. With this, the S&P 500 index .SPX, which is on track for its biggest monthly gain since July of last year, appears poised to challenge its summer 2023 highs:

Of note, since the SPX closed back above the upper boundary of the 76.4%-78.6% Fibonacci retracement zone of its 2022 decline in the 4,505.44-4,534.63 area on Nov. 20, this zone has flipped from recently acting as resistance to acting as support.

The SPX has now registered six-straight closes above the upper boundary of this band.

If the e-mini futures premarket gains hold, the SPX can near its July 31 closing high at 4,588.96 shortly after the open.

That said, especially tough hurdles reside at the July 27 intraday high, at 4,607.07, as well as the late-March 2022 intraday high, at 4,637.30.

Additionally, there is a weekly Gann Line from the early-January 2022 high, which is also around 4,637 this week, making this level particularly significant (Gann Lines are trend lines running at certain angles off significant highs and lows).

A weekly close above this resistance can suggest the SPX will aim for its 4,818.62 January 2022 record high.

Bulls want to see the 4,534.63-4,505.44 area continue to contain weakness. Closing back below here, however, can suggest risk of an exhausted advance and refocus the SPX on the November 14 gap, which runs from 4,458.97 down to 4,421.76. There is another weekly Gann Line around 4,450 this week.

The rising 100-day moving average ended Tuesday around 4,415.

(Terence Gabriel)

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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)