Economic Announcements:

• 1:30 PM : Unemployment

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Corporate Earnings:

• N/A

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S&P 500 Analysis:

VPOC: 6655
VA: 6637.75-6660.75
High-Low: 6616.50-6684.75
PP: 6650
Open: 6629.75 (Zone 2)
VIX: 25.13

Yesterday, the S&P 500 opened below the 6650-6655 resistance zone in a bullish imbalance, just above the previous day’s VAH. Throughout the morning, the price consolidated around this resistance zone, testing the VAH and the previous day’s high without ever managing to break them.

At the US open, the previous day’s high was briefly broken but immediately rejected by sellers. They attempted to re-enter the value area but were rejected in the middle of it. The price then returned to the morning levels to close near Tuesday’s VAH.

Since the beginning of the week, investors seem to be waiting for developments in the Middle East conflict following the measures taken by the United States.

This morning, the price opened in Zone 2 at 6629.75 in a bearish imbalance and has already tested the previous day’s low at 6616. The price is sitting on the 200-day moving average at 6620. Indicators are currently mostly bearish.

Note that the “single print” formed on Friday has not been fully filled and is still present between 6563 and 6573. Option levels still show a put zone at 6500 and 6600, followed by a call zone at 6800.

Today, we will have the unemployment data, and we must closely monitor developments in the Iran conflict.

Scenario 1 🟡: Upon rejection of the 6600-6610 support zone, the price could consolidate between this zone and the previous day’s VAH at 6660

Scenario 2 🔴: Upon a break of the 6600-6610 support zone, the price could trend lower and target the single print at 6563 and 6573, then the 6525-6550 support zone

Scenario 3 🟢: Upon a break of the 6650-6655 resistance zone and confirmation by a break of the VAH-1, the price could target the 6685-6695 resistance zone, followed by 6740-6745

Key Levels:

• 6771-6777 (Resistance zone)
• 6740-6745 (Resistance Zone)
• 6685-6695 (Resistance Zone + Previous Day’s High 6684.75)
• 6650-6655 (Resistance Zone + VPOC-1 6655)
• 6600-6610 (Support zone)
• 6580-6585 (Support Zone)
• 6525-6550 (Support Zone)

Market situation

Wall Street ended higher, with major indices rising due to falling Treasury yields. The Dow Jones gained 0.66%, the S&P 500 0.54%, and the Nasdaq 0.77%. This trend was fueled by hopes of de-escalation in the Middle East conflict, although inflation concerns persist.

Geopolitical Context

Iran is reviewing a US proposal to end the ongoing war, which has raised hopes among investors. However, the Iranian Foreign Minister clarified that this does not mean negotiations are underway.

Geopolitical Calendar

The summit between Donald Trump and Xi Jinping is now set for May 14 and 15 in Beijing, after a six-week delay due to the conflict in Iran.

Trade Exchanges

The Chinese company COSCO has resumed container bookings to the Middle East (UAE, Saudi Arabia, etc.), signaling a partial and uneven reopening of trade routes.

US Economy

The weekly jobless claims report is expected, with a slight increase in initial claims projected. Several Federal Reserve members are also scheduled to speak on various economic topics.

Currency and Commodity Movements

The US dollar continued to gain ground against other currencies, while gold prices rose, supported by falling oil prices. Oil prices dropped, which also helped ease inflationary fears.

Impact of the Iran War

• Timeline: Trump aims for a swift end to the conflict within 4 to 6 weeks.
• Strategic Threats: Kharg Island, which handles 90% of Iranian oil exports, is a major potential target. A ground operation to take control of it is now considered a credible scenario by the market.
• Iran’s Position: Tehran still rejects direct talks, despite Trump’s claims that Iran “wants a deal but is afraid to say so.”

The Inflation (Import/Export) / Economic Resilience Duo: Imported inflation is soaring, the economy is holding up.

Import Price Index (Monthly) (Feb):

• Actual: 1.3%
• Forecast: 0.6%
• Previous: 0.6%

Export Price Index (Monthly) (Feb):

• Actual: 1.5%
• Forecast: 0.5%
• Previous: 0.6%

Current Account Balance (Q4):

• Actual: -190.7B
• Forecast: -211.0B
• Previous: -239.1B

-> The Finding: Prices related to international trade are shattering expectations. Meanwhile, the US deficit is narrowing, proving that the economy remains very solid.

Summary

• Inflation is taking its toll: It is imported and will eventually impact the consumer.
• Impact for the FED: Strong economy + hot inflation = no reason to cut rates. The Fed remains hawkish.
• Market Action: Ideal fuel to buy the Dollar and sell Equity Indices and Gold.

The Black Gold Shock (Oil): Tanks are overflowing, the market caught off guard.

Crude Oil Inventories:

• Actual: 6.926M
• Forecast: -1.300M
• Previous: 6.156M

Cushing, Oklahoma Crude Inventories:

• Actual: 3.421M
• Previous: 0.944M

-> The Finding: A massive blow to buyers. The market expected reserves to be depleted, but we are left with a surplus of nearly 7 million barrels.

Summary

• A signal of weak demand: Massive imbalance. The economy is no longer absorbing current production.
• Market Action: Fundamentally a strong sell signal for Oil.