Economic Announcements:

• 1:30 PM: PCE
• 1:30 PM : GDP
• 1:30 PM: Durable Goods Orders
• 3:00 PM : JOLTS Employment Report
• 3:00 PM : Michigan Index

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Earnings Reports:

No update

S&P 500 Analysis:

VPOC: 6698
VVA: 6689.75-6723
High-Low: 6671.75-6760.75
PP: 6700
Open: 6691 (Zone 1)
VIX: 24.64

S&P 500 Trend: Overall Bearish Sentiment 🔴

Yesterday, the S&P 500 opened at the resistance zone of 6771-6777 and quickly declined, exiting the previous day’s value area to reach the support zone of 6715-6720. Buyers attempted to regain control and tested the VVAL-1 at 6754 but failed to re-enter yesterday’s value area. The price then returned to the support zone before the US open.

At the US open, sellers took control and broke the support zone of 6715-6720, and the price consolidated around the support zone created between 6690-6695 and the resistance zone of 6715-6720 for much of the afternoon.

In the evening, the price broke the support at 6690-6695 to seek the support zone of 6670-6676 before closing around 6680.

This morning, the US index opens in zone 1 at 6691, near the VVAL-1 that sellers broke to seek the support zone of 6670-6676 along with yesterday’s low at 6671. The price was sharply rejected by buyers who propelled it into yesterday’s value area up to 6711. Since then, the price has declined but remains within yesterday’s value area.

The overall sentiment is bearish, and options levels show large Put zones at 6750, 6700, 6600, and 6500.

Today we will have considerable macroeconomic data including the PCE index, GDP, the JOLTS employment report, durable goods orders, and the Michigan index. The price could consolidate while awaiting this data.

Scenario 1 🟡: On rejection at the support zone of 6671-6677, the price could consolidate between this zone and the resistance zone of 6715-6720, especially before 1:30 PM and the economic data.

Scenario 2 🔴: On break of the support zone of 6671-6677 and yesterday’s low, the price could continue its decline and seek the support zone of 6625-6640 then seek the Put zones at 6600.

Scenario 3 🟢: On break of the resistance zone of 6715-6720 and confirmation by exiting yesterday’s value area via the VAH-1 at 6723, the price could seek yesterday’s high at 6760 then seek the resistance zone of 6771-6777

Zones of Interest:

• 6771-6777 (Resistance zone)
• 6723 (VVAH-1)
• 6715-6720 (Resistance zone)
• 6690 (VVAL-1 + Open)
• 6671-6677 (Support zone + Yesterday’s low)
• 6623-6640 (Support zone)
• 6550-6560 (Support zone)

Impact of Middle East Tensions

Stocks fell after Iranian strikes on two oil tankers, leading to an increase in oil prices and exacerbating inflation concerns. Major stock indices, including the S&P 500, recorded their largest three-day decline, with losses exceeding 1%.

Rising Bond Yields

Treasury yields increased, reflecting growing concerns about persistent inflation and the possibility that the Federal Reserve may not be able to cut interest rates this year.

Economic Forecasts

The Personal Consumption Expenditures (PCE) price index report is expected, with a slight increase anticipated. Personal consumption and income are also expected to show modest growth.

Energy Market

• Brent crude prices surged 10.33% to reach $101.48 per barrel, while US light crude also increased. This price rise is attributed to geopolitical tensions and Iran’s promise to keep the Strait of Hormuz closed.
• Oil gains were contained by the US Treasury’s decision to grant, until April 11, a temporary license authorizing the sale of Russian oil already at sea to prevent any disruption to global deliveries.

Dollar’s Influence on Gold

The US dollar strengthened, which weighed on gold prices, which fell 1.68%.

Company-Specific Developments

News about companies such as JPMorgan, which is reducing its lending to private credit firms, and concerns regarding Lilly’s compounded drugs, signal tensions across various sectors.

Employment: Unwavering Resilience, the Market Remains Unfazed

Weekly Unemployment Claims:

• Actual: 213K
• Forecast: 214K
• Previous: 214K

Regular Unemployment Benefit Recipients:

• Actual: 1850K
• Forecast: 1850K
• Previous: 1871K

-> The US labor market refuses to buckle. Unemployment claims remain historically low and even slightly beat expectations. Meanwhile, continuing claims align perfectly with consensus and decline from the previous month. No sudden deterioration is in sight: the labor market is absorbing monetary policy without flinching.

Foreign Trade: Surprise Deficit Reduction, America Exports

Trade Balance (Jan.):

• Actual: -$54.50B
• Forecast: -$66.60B
• Previous: -$72.90B

Exports:

• Actual: $302.10B
• Previous: $286.30B

Imports:

• Actual: $356.60B
• Previous: $359.20B

-> This is an excellent surprise for growth. The trade deficit shrinks massively, crushing consensus expectations (nearly $12 billion better than hoped). This spectacular dynamic is explained by a sharp jump in US exports coupled with a slight contraction in imports. This is a very positive combination that will inflate the quarterly GDP calculation.

Real Estate: Housing Starts Rebound Masks More Cautious Outlook

Housing Starts (Jan.):

• Actual: 1.487M
• Forecast: 1.340M
• Previous: 1.387M

Housing Starts (Monthly) (Jan.):

• Actual: 7.2%
• Previous: 4.8%

Building Permits (Jan.):

• Actual: 1.376M
• Forecast: 1.420M
• Previous: 1.455M

-> The data sends a mixed signal, but the current snapshot is very robust. On one hand, housing starts blow past expectations, reflecting strong present activity on the ground. On the other hand, building permits, which are the leading indicator of future demand, disappoint and decline. Builders are operating at full capacity today but are showing slightly more caution for the months ahead.

Summary

• The “No Landing” Scenario Confirmed: Far from a sharp contraction, these statistics paint the portrait of a US economy that refuses to slow down. Employment is clinically solid, foreign trade provides an unexpected tailwind to growth, and current construction activity is extremely vigorous. The risk of recession is off the radar for now.
• Absolute Comfort for the Fed: Unlike a crisis scenario that would require emergency intervention, the Federal Reserve is in the driver’s seat here. This economic resilience gives it all the luxury of time. It has absolutely no pressure to initiate or accelerate a rate-cutting cycle, because the machine is running very well on its own. Markets must accept that the Fed will not come to the rescue of an economy that is not in danger.