Wednesday saw a dynamic session for the S&P 500 futures (CME: ES), characterized by fluctuations driven by significant data releases. Initially, attention was drawn to the FOMC minutes from the January meeting, revealing a prevailing caution among members regarding premature rate reductions. This sentiment echoed recent economic indicators, with both CPI and PPI readings surpassing expectations. Despite this insight, the market response was muted, with expectations for rate cuts in March and May already factored in.
However, the real catalyst for market movement emerged with the quarterly earnings report from semiconductor powerhouse Nvidia. Surpassing expectations yet again, the company’s stellar performance propelled its share price upwards by over 8% after hours. This impressive earnings beat not only buoyed investor confidence but also underscored the enduring optimism surrounding AI technologies, providing a late-session boost to equity markets.
Technical
On the 4H chart, the price action of the futures has been moving sideways following the breakdown at the uptrend. The 25-SMA (green line) and 50-SMA (blue line) have converged, confirming the neutrality in the market. From the previous downturn, the price action has pushed above the 61.8% Fibonacci golden ratio at 5,023.50, and the resistance of the rectangle could be tested if it clears the retest of the uptrend breakdown.
If the price moves lower from the retest, it could reach the 5,023.50 support again, where a breakdown could shift the price toward a psychological level where the multiple SMAs converge with the Fibonacci midpoint at 5,012.00. While it is likely for support to be found here, the possibility of another breakdown remains, which could drive the price toward 4,980.25 and 4,960.50 to test the support of the consolidation rectangle.
However, if the price moves higher in the upcoming session, it could move toward the resistance at 5,060.00. While this level has proven challenging in the past, a breakout is possible, which could lead the price on a path toward the 161.8% Fibonacci extension at 5,120.25.
Summary
The S&P 500 futures reacted little to the FOMC minutes on Wednesday but enjoyed a late rally spurred by Nvidia’s earnings beat. Support at 5,023.50 could be in focus in the upcoming session to underpin a retest of the rectangle resistance at 5,060.00.
Sources: Koyfin, Tradingview
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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