FUNDAMENTAL
OVERVIEW
The S&P 500 eventually reached
a new all-time highs after a crazy rally since the start of April on growing
expectations of an end to the war. The playbook has been very similar
to April 2025 when we first get Trump backtracking on tariffs (this time Trump
started talking about ceasefire) and then negotiations that kept traders
speculating on a resolution.
On Friday, it looked like a
deal was within reach after a barrage of positive news.
In return, the US would
release $20 billion in frozen Iranian funds.
Everything pointed to an imminent deal, but we started to see some weakness into the
weekend after Trump said that the US would keep the blockade of the Strait of
Hormuz in place until a deal with Iran was finalized. Traders might have hedged
into the weekend due to the risk of an escalation. This is exactly what happened
as Iran reclosed the Strait in retaliation to the US blockade.
The good news is that the
ceasefire is still holding and we are still getting reports of talks and preference
for a diplomatic resolution. The bad news is that the ceasefire is expiring
tomorrow unless we get another extension, which is what the market expects given
Trump’s track record. The price action continues to be driven by US-Iran headlines,
and this is unlikely to change until we get an official resolution.
An extension to the deadline should keep supporting the market on hopes of an eventual breakthrough but if the bombs start dropping again, it’s going to be a bloodbath in the markets given the overstretched levels.
S&P 500
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On
the daily chart, we can see that
the S&P 500 has surged into new
record highs last week and it’s now pulling back a bit amid the renewed US-Iran
tensions. The previous all-time high around the 7,040 level might now act as
support. If the price pulls back, we can expect the buyers to step in with a
defined risk below the support to position for a rally into new all-time highs.
The sellers, on the other hand, will look for a break lower to position for a
drop into the 6,800 level next.
S&P 500
TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On
the 4 hour chart, we have an
upward trendline defining the bullish momentum. If the price extends the fall
below the support, we can expect the buyers to lean on the trendline next with
a defined risk below it to keep pushing into new highs. The sellers, on the
other hand, will look for a break to increase the bearish bets into the 6,800
level next.
S&P 500 TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we have
a minor counter-trendline acting as support for now. The buyers will likely
continue to lean on it to keep pushing into new highs, while the sellers will
look for a break to extend the pullback into the 7,040 support. On Thursday, we get the latest US Jobless
Claims figures and the US PMIs. The focus remains on US-Iran headlines ahead of
the ceasefire deadline tomorrow
