Battleship Between Iran and US
Economic Announcements:
Earnings Reports:
Analysis:
VPOC: 6787.75
VAL: 6775.75-6827.25
High-Low: 6762.50-6852
PP: 6800
Open: 6787.25 (Zone 1)
VIX: 24.02
SP500 Trend: Neutral 🟠 to Bullish 🟢 overall sentiment
Yesterday, the S&P 500 opened between the support zone of 6771-6777 and the resistance zone of 6815-6830 with several breakout attempts at both extremes, but the price remained trapped between these two zones until the US open. The previous day’s VPOC was located in the middle of this zone, showing agreement from both sides on the index price.
At the US open, sellers attempted to take control with a new attempt to break the 6771-6777 support, but it held with a strong reaction from buyers who in turn attempted to break the 6815-6830 resistance, with a breakout that took the price to the previous day’s high at 6854. However, at this level, the price violently reintegrated the previous day’s value area following news of the presence of mines in the Strait of Hormuz. The price returned around the previous day’s VPOC to close around 6800.
This morning, the S&P 500 opens in zone 1 at 6787.25 on the previous day’s VPOC. Buyers have taken control, pushing the price above the 6800 pivot and onto the 6815-6830 resistance zone. The cumulative delta has stabilized and is now in neutral territory. The price could reproduce yesterday’s scenarios, at least during the morning, while awaiting CPI figures at 1:30 PM.
In terms of options, we still observe a strong level of Puts at 6600, indicating downside hedging. We also have (lighter) call levels around the 7000 level.
The VIX remains around 24, volatility is still present, and the situation in the Middle East can still move quickly, so exercise caution when taking positions.
Today, we will have CPI data at 1:30 PM, as well as crude oil inventories at 3:30 PM.
Scenario 1 🟡: On rejection at yesterday’s high of 6852 and at the resistance zone of 6857-6866, the level could consolidate between this resistance and the support zone of 6771-6777.
Scenario 2 🟢: On breakout of yesterday’s high at 6852 then the resistance zone of 6857-6866, the price could target the resistance zone of 6883-6900 then on breakout of 6900 target the zone of 6930-6930.
Scenario 3 🔴: On breakout of the support zone of 6771-6777, the price could move lower and target yesterday’s low at 6762, then the support zone of 6715-6720 then 6600.
Zones of Interest:
- 6993-7000 (Resistance Zone)
- 6920-6930 (Resistance Zone)
- 6883-6900 (Resistance zone)
- 6855-6866 (Resistance zone)
- 6852 (Yesterday’s high)
- 6815-6830 (Resistance zone + VVAH-1 6827)
- 6771-6777 (Support zone)
- 6762 (Yesterday’s low)
- 6715-6720 (Support Zone)
- 6624-6640 (Support zone)
60-second Chrono
Market Status
The S&P 500 and Dow Jones indices declined, losing their previous gains due to weakening hopes for a quick resolution to the US-Israeli conflict against Iran. The S&P 500 decreased by 0.21%, while the Dow fell by 0.07%. In contrast, the Nasdaq increased slightly.
Treasury Yields
Yields were mixed, with fluctuations due to news regarding the conflict in Iran, which raised concerns about military threats.
Commodity Movements
Gold prices increased, supported by a weaker dollar, while oil fell more than 7% due to President Trump’s comments suggesting a possible end to the conflict.
Economic Data
The Bureau of Labor Statistics forecasts a 0.3% increase in the Consumer Price Index (CPI) for February. The budget deficit is estimated at $75.85 billion, down from $95 billion.
Middle East Conflict
The United States destroyed 16 Iranian mine-laying vessels near the Strait of Hormuz and warned Tehran to immediately remove all mines or face military consequences.
Oil
The International Energy Agency is considering a record release of oil reserves to stabilize markets following geopolitical tensions in the Strait of Hormuz.
Company Earnings
Campbell’s and Bumble are preparing to release their earnings, with expectations of volatility in their respective sectors.
Economic Context
Stagflation concerns persist, and investors are confused by conflicting information about the end of the conflict. Analysts expect the Bank of Canada to maintain its interest rates despite economic challenges.
Notable Events
SpaceX is considering a Nasdaq listing, and AT&T announces a $250 billion investment plan to improve its infrastructure.
Macro
US Economy: Housing Market Surprises with Strength Despite High Rates
Existing Home Sales (Feb.):
- Actual:4.09M
- Forecast: 3.89M
- Previous: 4.02M
-> This is an excellent surprise for the sector. Despite mortgage rates that remain historically high, existing home sales are rebounding significantly, far exceeding consensus. This demonstrates strong demand resilience: after months of waiting, American buyers appear to be adapting to the “new normal” of interest rates or deciding to take action in anticipation of future rate cuts by the Fed. Available inventory is finding buyers more easily than expected.
Summary
American consumer resilience: The fact that households continue to invest in real estate proves that confidence and financial strength remain intact. This is a clear sign of economic vitality that further distances the specter of a near-term recession.
A double-edged signal for the Fed: While this vitality is good news for growth, it could also alert the Federal Reserve. A dynamic housing market generates significant ancillary activity and may reignite inflationary pressures. This unexpected strength gives the Fed additional arguments not to rush into rate cuts and to maintain its restrictive policy for a while longer.
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