ES1! Big Picture:
- ATH on December 6th, 2024: 6,184.50
- There has been no significant correction or pullback since the ATH.
- Currently, the market has pulled back ~8.20% from the ATH.
- The previous correction (over a 10% pullback, but less than a 20% downturn) occurred after ES futures hit an all-time high of 5,856 on July 15th, 2024. The market bottomed out on August 5th, 2024.
- Currently, ES futures are trading below the 50% retracement level from the ATH on December 6th, 2024, and the swing low on August 5th, 2024, at 5,719.25.
Given the current "risk-off" sentiment, let's review the updated price map for ES Futures.
Key Levels:
- Important level to reclaim if no correction: 5,795.25 - 5,800
- Key LVN (Low Volume Node): 5,738 - 5,696
- Mid 2024 range: 5,574.50
- Key Support: 5,567.25 - 5,528.75
- 2024 YTD mCVAL (Market Composite Value Area Low): 5,449.25
- 2022 CVAH (Composite Value Area High): 5,280
Key Support: 5,567.25 - 5,528.75
This zone is important in the event of a 10% pullback, which could lead to a bounce thereafter.
On our regular 4-hour time frame, which we use for weekly analysis and preparation, higher lows have been breached, and ES futures are now trading below the lows from November 4th, 2024, January 13th, 2025, and February 28th, 2025.
The probable next downside target is the 50% retracement of the 2024 range, which stands at 5,574.50.
Unless we see a sustained bounce that reclaims the 5,795.25 - 5,800 zone, the key support level at 5,567.25 - 5,528.75 is likely to be tested, aligning with our expected 10% pullback.
Note that a bear market (i.e., a pullback greater than 20%) wouldn't begin until prices drop to around 4,900, which is still about 750 points away from the current price level of 5,650.
Considering all the above, what can we expect this week?
CPI and PPI data are due this week, and the market is currently in "risk-off" mode. This sentiment is exacerbated by Federal Reserve Chairman Powell's comments on needing more data before altering rate path, combined with tariffs complicating the US economy.
What price level might prompt policymakers to adjust their stance?
The Fed’s dual mandate considers both 2% inflation and low unemployment. With the unemployment rate edging above 4% and inflation remaining high, this upcoming inflation reading is critical. We believe this report may trigger volatility not seen in recent months with CPI releases. We have the SEP and FOMC rate decision coming up on March 19th, 2024.
Scenario 1: Soft CPI than expectations
Expecting volatile price action, however, a V-shaped recovery given softer CPI reading. Markets go in wait and see
Scenario 2: Range bound week
In this scenario, we expect a range bound week, with inflation print in line and markets in wait and see mode for FED FOMC announcement.
Scenario 3: High CPI print
With a higher CPI print, FED will be in a difficult position to cut rates. Will this bad news be bad for the market or good? Mounting risks point to further downside if we do not get any pivot on macro level to support the economy.
EdgeClear
P: 773.832.8320 | TF: 844-TRADE20
Derivatives trading involves a substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. The views expressed are opinions, not financial advice.
P: 773.832.8320 | TF: 844-TRADE20
Derivatives trading involves a substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. The views expressed are opinions, not financial advice.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
EdgeClear
P: 773.832.8320 | TF: 844-TRADE20
Derivatives trading involves a substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. The views expressed are opinions, not financial advice.
P: 773.832.8320 | TF: 844-TRADE20
Derivatives trading involves a substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. The views expressed are opinions, not financial advice.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.