ES1! Macro Update:
The escalation of reciprocal tariffs and China's countermeasures have sent shockwaves through markets, with widespread selloffs across asset classes, including gold. Fund managers and investors were forced to liquidate positions to cover margin calls. The likelihood of a global recession has surged, with Goldman Sachs raising the probability of a US recession to 45% from 35%. Meanwhile, JPMorgan increased its global and US recession odds to 60%, up from 40%, due to intensifying tariff tensions.
The March 2025 Federal Reserve’s SEP projections suggest slowing growth amid rising inflation concerns, pointing in the right direction. Is this a paradigm shift, or was it already set in motion earlier in the decade? Or is this simply panic selling, with the expectation that US administration policy will soon stabilize markets?
If it is a paradigm shift—as seems more likely based on recent developments—the current environment could prove historic, aligning with Ray Dalio's concepts on the changing world order, debt crises, and how nations go bankrupt.
Investor Confidence: ES futures are currently down over 20%, entering bear market territory for the first time since the 2020 pandemic crash. The big question now is whether we’ll see a relief rally or continued sell-offs with occasional pullbacks, or if markets are establishing a new value range based on auction market principles.
• 2024 YTD mCVAL: 5379.75
• 2022 CVAH: 5376
• March 2025 Low: 5533.75
• August 5th, 2024 Low: 5306.75
• Neutral LVN: 5191.50 - 5156.25
• April 4th, 2025 Low: 5074
• 2024 Yearly Low: 5016.25
• CVPOC 2022: 4610.50
Scenario 1: Further Downside The key downside level for ES Futures is 4610.50, where the most volume has been transacted since 2022. Currently, ES Futures are trading above this level. If the market establishes a value range between 4900 and 4500, further selling with brief pullbacks and consolidation above the 2022 CVPOC seems likely.
Scenario 2: Relief Rally For a rally to take hold, ES Futures faces key resistance levels: the 2024 Low at 5016.25 and the pWeek Low at 5074. If markets sustainably stay above these levels, we could see a rally toward the 2022 CVAH at 5376. However, the sustainability of such a rally remains in question given the mountain of uncertainties ahead.
It is important to note that uncertainty tends to create highly volatile market regimes. Traders should adjust the expected daily range accordingly. A good indicator to measure this is “Daily Average True Range”, many traders also rely on close-to-close standard deviation bands to gauge range on a given trading day. As such, we could see moves of 3% or more in either direction on any day.
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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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.