E-mini S&P 500 Surges on Crude Oil Plunge

March E-mini S&P 500 Index futures are up sharply late in the session on Wednesday as recently surging commodity prices, especially crude oil, cooled off while the war in Ukraine continues.

Investors are reacting to an easing in commodity prices that have spooked stocks lately. Energy and agriculture products, in particular, have catapulted higher amid the fighting in Ukraine, while some metals also have posted major gains.

Oil prices took a sharp leg lower in afternoon trading, giving stocks an extra boost. West Texas Intermediate crude, the U.S. oil benchmark, was last down 10% to around $110, while Brent crude, the international standard, fell 11% to around $114.

At 18:30 GMT, March E-mini S&P 500 Index futures are trading 4276.25, up 107.50 or +2.58%. The S&P 500 Trust ETF (SPY) is at $427.40, up $11.15 or +2.68%.

In stock related news, energy shares were lower as oil prices fell sharply. Bank stocks moved higher as Treasury yields rose. PNC Financial was up 4% and Wells Fargo rose more than 5%. Goldman Sachs and JPMorgan were 3% higher each.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 4101.75 will reaffirm the downtrend. A move through 4418.75 will change the main trend to up.

The minor trend is also down although a new minor bottom was formed at 4138.75.

The index is currently trading on the strong side of the main retracement zone at 4263.25 to 4134.75, making this area support. It stopped the selling on Tuesday at 4138.75.

On the upside, the first minor resistance is a 50% level at 4344.00. This is followed by the short-term retracement zone at 4455.00 to 4538.50.

Short-Term Outlook

The direction of the March E-mini S&P 500 Index into the close on Wednesday and on the opening Thursday is likely to be determined by trader reaction to the main 50% level at 4263.25.

Bullish Scenario

A sustained move over 4263.50 will indicate the presence of buyers with 4344.00 the first upside target.

Bearish Scenario

A sustained move under 4263.50 will signal the presence of sellers. This could lead to a quick break into 4214.75. If this fails then look for a retest of the support cluster at 4138.75 to 4134.75.