June E-mini S&P 500 Index futures are trading lower shortly before the cash market opening, erasing all of its earlier gains after the release of a key U.S. inflation report came in higher than expected.

At 12:41 GMT, the benchmark index is trading 3970.25, down 26.50 or -0.66%. This is down from an overnight high of 4050.50. On Tuesday, the S&P 500 Trust ETF (SPY) settled at $399.05, up $0.88 or +0.22%. Based on current trading conditions, it is expected to open lower.

April’s consumer price index showed an 8.3% jump. Dow Jones economists expected an 8.1% increase. This compares with March’s 8.5% year-over-year pace.

Stocks are under pressure because some traders were bottom-picking this week ahead of the report and betting inflation had peaked. The surge in inflation likely means the Fed is going to have to maintain its extremely hawkish stance and continue to attack price rises with aggressive 50-basis point rate hikes. This is bearish news for stocks.

Daily June E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 3961.75 will signal a resumption of the downtrend. A move through 4303.00 will change the main trend to up.

The minor range is 4303.00 to 3961.75. Its retracement zone at 4132.50 to 4172.75 is the nearest resistance. This zone will move lower if 3961.75 fails as support.

The short-term range is 4509.00 to 3961.75. Its 50% level at 4235.50 is additional resistance.

Daily Swing Chart Technical Forecast

The direction of the June E-mini S&P 500 Index on Wednesday is likely to be determined by trader reaction to 3991.50.

Bearish Scenario

A sustained move under 3991.50 will indicate the presence of sellers. The first downside target is 3961.75. Taking out this level will indicate the selling pressure is getting stronger. This could trigger a further break into the March 30, 2021 main bottom at 3904.75, followed by the March 24, 2021 main bottom at 3844.50.

Bullish Scenario

A sustained move over 3991.50 will signal the presence of buyers. Taking out the intraday high at 4050.50 will indicate the buying is getting stronger. This could trigger an acceleration into the minor retracement zone at 4132.50 to 4172.75.