Economic Announcements:

• 2:30 PM: PPI
• 3:45 PM: Chicago PMI
• 4:00 PM: Construction Spending

Earnings Reports:

No update

Analysis:

VPOC: 6918.75
VVA: 6879-6924.25
High-Low: 6870.75-6970.75
PP: 6900
Open: 6899
Vix: 18.62

SP500 Trend: Overall neutral sentiment 🟠

Yesterday, the SP500 opened with a slight bearish gap after the rally following Nvidia’s earnings. The price re-entered the previous day’s VVA and consolidated within this value area before attempting to break out upwards just before the US open, filling a small part of the opening gap.

At the US open, sellers aggressively took control, driving the price down to the 6872-6874 support zone without even pausing at previous support areas. The price then consolidated in a wide range between the 6872-6874 support zone and the 6920-6930 resistance zone. The price closed at 6918. The index fell by 0.4%, as did the Nasdaq. Nvidia’s strong results were viewed from an annual perspective and showed a slight weakening. AI is no longer as magical for investors, who are beginning to consider the return on investment related to the colossal expenditures of tech giants, as Investing illustrates very well.

This morning, the US index opened with another small bearish gap at 6899 and is consolidating in the 6883-6900 support zone, around the weekly VPOC and VWAP. The price has returned to last week’s levels and may consolidate after yesterday’s sharp decline. The zone that needs to be broken for a potential return to an uptrend is still the 6920-6930 resistance zone, which also includes the VPOC and yesterday’s high.

Options show us a certain balance in the areas of interest. We have call zones at 6900, 6950, and 7000, and put zones at 6850 and 6800.

Today, we will have PPI data, the Chicago PMI, and construction spending, which could animate the market.

Zones of Interest:

• 7030-7043 (Major resistance zone + ATH 7043)
• 6993-7000 (Resistance zone + 7000 Calls zone)
• 6970 (Yesterday’s High)
• 6956-6963 (Resistance zone)
• 6920-6930 (Resistance Zone + VPOC-1 + VVAH-1)
• 6883-6900 (Resistance Zone + Open + 6900 Put Zone)
• 6857-6866 (Support Zone)
• 6815-6830 (Major Support Zone)
• 6800 (Put Zone)

Market Performance

The S&P 500 and Nasdaq indices recorded a decline, primarily due to disappointing Nvidia results that curbed technological enthusiasm. The S&P 500 fell by 0.54%, while the Nasdaq dropped by 1.18%.

Bond Markets and Commodities

Treasury securities gained value due to geopolitical tensions with Iran, while gold prices rose. Oil prices remained stable despite recent volatility.

Upcoming Economic Data

The Producer Price Index (PPI) for January is expected, with a projected increase of 0.3%. Construction spending is also anticipated to show a slight rise.

Market Reactions

Investors appear concerned about Nvidia’s ability to maintain its growth momentum amidst increasing competition in the artificial intelligence sector. Geopolitical fears related to Iran have also influenced investment decisions.

Other Economic News

The report mentions financial results from other companies, such as the Royal Bank of Canada, which surpassed earnings forecasts, and concerns about rare earth shortages in the aerospace industry.

General Trends

Markets seem to be awaiting a clear catalyst for new directions, with growing concerns about short-term economic stability.

US Labor Market: Sustained Resilience

Weekly Unemployment Claims:

• Current: 212K
• Forecast: 217K
• Previous: 208K

-> This is a sign of strength for the US economy. The number of people filing for unemployment for the first time is lower than market expectations. Even if it’s a very slight increase compared to the previous week, the figure remains low. This proves that American companies are laying off very few people and that the labor market remains tight and robust.

Regular Unemployment Benefit Recipients:

• Current: 1833K
• Forecast: 1860K
• Previous: 1864K

-> This figure supports and confirms the first statistic. It indicates the number of people who continue to receive unemployment benefits. Its surprising decline shows that not only are there few new applicants, but also that those who are unemployed tend to find jobs quickly enough to exit the assistance system.

Summary

A Supported Dollar, but Pressure on Indices: Such a vigorous labor market means the economy is not slowing down. Consumers have wages and continue to spend, which risks keeping inflation at a “sticky” level. This is generally bullish for the Dollar: a strong economy encourages the Fed to maintain high interest rates for longer, which attracts capital. Conversely, this can create downward pressure on stock indices, as high rates are costly for companies and delay the monetary easing hoped for by investors.