The S&P 500 and
the “Trump Fantasy”
Economic Announcements:
- 2:30 PM : Trade Balance
- 2:30 PM: Unemployment
- 5:30 PM: Atlanta Fed GDPNow
Corporate Earnings:
- N/A
S&P 500 Analysis:
VPOC: 6619.50
VVA: 6600-6635
High-Low: 6561-6653.75
PP: 6610
Open: 6618.50 (Zone 1)
Vix: 26.16
Yesterday, the S&P 500 opened above the 6550-6560 support zone. Buyers took control and pushed the price to the 6600-6610 resistance zone, exiting the value area at 6583. The price then consolidated around this resistance until the Wall Street open.
At the US open, sellers attempted to take control with a tried break of the 6600-6610 support, but the zone was defended by buyers who attempted to drive the price higher. The index rose to the 6650-6655 resistance zone but was rejected. The price closed around 6620.
This morning, the US index opened in Zone 1 at 6618 and settled on the 6600-6610 support zone. Around 3:00 AM, following Trump’s speech regarding Iran, the price moved lower, breaking the previous day’s lows at 6561. During its decline, the price created a single print between 6570 and 6608. The price is currently around 6530, right at the edge of the single print formed Tuesday between 6500 and 6530.
Regarding options, we have significant put interest zones that could be of interest at 6500 and 6600, and call zones at 6600 and 6800.
Today, on the macro front, we will have the trade balance and unemployment figures at 2:30 PM, as well as the Atlanta Fed GDPNow at 5:30 PM.
Scenario 1 🟡: Upon rejection at the previous day’s low of 6561, the price could consolidate between this level and Tuesday’s Single Print at 6500-6530.
Scenario 2 🟢: Upon a break of the previous day’s lows at 6561, the price could resume its uptrend and seek to reintegrate yesterday’s value area above 6600 and toward 6635, then target yesterday’s high at 6653.
Scenario 3 🔴: Upon filling Tuesday’s Single Print at 6500-6530, the price could target the 6440-6460 support zone.
Key Levels:
- 6685-6695 (Resistance Zone)
- 6650-6655 (Resistance zone + previous day’s high 6653)
- 6600-6610 (Resistance zone + VVAL-1 6600)
- 6530-6550 (Support zone)
- 6500-6530 (Single Print)
- 6440-6460 (Support Zone)
- 6360-6370 (Support Zone)
60-Second Clock
Market Performance
Stocks rose, boosted by a drop in oil prices after President Trump suggested that a resolution to the Middle East conflict could be near. The S&P 500 gained 0.72%, the Nasdaq 1.16%, and the Dow Jones 0.48%.
Interest Rates and Bonds
Bond yields decreased, reflecting solid economic data suggesting that Federal Reserve rates will remain high. Investors sold government bonds, increasing their risk appetite.
Commodities Market
Gold prices rose due to a weaker dollar, while oil prices fell as analysts anticipate that Trump will not allow oil supply disruptions ahead of strong summer demand.
Upcoming Economic Reports
The weekly jobless claims report is expected to show a slight increase in initial claims, while the US trade deficit is expected to widen.
Corporate News
SpaceX has filed for an initial public offering, Eli Lilly obtained approval for its obesity drug, and Intel announced a buyout of its stake in a factory in Ireland.
Impact of the Iran War
Toward an End to the Conflict? Trump reiterated a 2 to 3-week timeline for the end of operations in Iran, stating that military objectives are nearly achieved.
Strait of Hormuz: The United Arab Emirates (UAE) is pushing to reopen the strait by force. A Sino-Pakistani peace initiative (5-point plan) has been presented to restore navigation.
Risk of Escalation: Rumors mention the possibility of a US ground troop deployment to secure Iranian uranium.
Macro
Consumption & Private Employment / Economic Resilience
Consumption is soaring, the job market is holding firm.
ADP Non-Farm Employment Change (Mar):
- Actual: 62K
- Forecast: 41K
- Previous: 66K
Retail Sales (Monthly) (Feb):
- Actual: 0.6%
- Forecast: 0.5%
- Previous: -0.1%
Core Retail Sales (Monthly) (Feb):
- Current: 0.5%
- Forecast: 0.3%
- Previous: 0.0%
-> The Observation: The American consumer is doing wonderfully and continues to spend heavily. Meanwhile, private sector job creation (ADP) surprised to the upside compared to expectations, confirming that the labor market remains solid.
Summary
- The US economy is running at full throttle: Consumption, which is the primary engine of US growth, is accelerating. There are no signs of a recession in the short term.
- Impact for the FED: Such a robust economy, driven by strong demand, gives the FED every reason to maintain high rates. There is no urgency to ease monetary policy.
- Market Action: This is a very favorable environment for the Dollar.
Industry & Inflation (ISM) / Red Alert on Prices
Industry in expansion, but costs are exploding.
ISM Manufacturing PMI (Mar):
- Current: 52.7
- Forecast: 52.3
- Previous: 52.4
ISM Manufacturing – Prices Paid (Mar):
- Actual: 78.3
- Forecast: 74.0
- Previous: 70.5
ISM Manufacturing – Employment (Mar):
- Actual: 48.7
- Forecast: 49.0
- Previous: 48.8
-> The Observation: US manufacturing is accelerating and remains in clear expansion. However, the most critical data point is the “Prices Paid” component, which is literally exploding past expectations. This means factories are paying much more for their raw materials. We also note a slight contraction in the sector’s employment component.
Summary
- The specter of industrial inflation: Production costs are soaring violently. This source inflation will mechanically pass through to the final prices paid by consumers in the coming months.
- Impact for the FED: This is the worst possible data for hoping for a rate cut. Industrial inflation at this level forces the FED to remain extremely strict to avoid a new wave of generalized inflation.
The Shock to Black Gold
Tanks continue to fill, supply dominates.
Crude Oil Inventories:
- Actual: 5.451M
- Forecast: 1.800M
- Previous: 6.926M
-> The Observation: The losing streak continues for black gold. Inventories are accumulating much more strongly than expected.
Summary
- A signal of overabundance: The continued accumulation of stocks proves a short-term imbalance: physical crude consumption in the US is not absorbing the available supply.
- Market Action: This is a fundamentally very bearish signal for Oil.
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