ES (SPX, SPY) Analysis, Key-Zones, Setup for Wed (Feb 25)E-mini S&P 500 FuturesCME_MINI:ES1!MyAlgoIndexTuesday was a relief rally after Monday's brutal AI-driven selloff. ES clawed back from a 6,828.50 low to close near 6,901, a solid 73-point recovery off the lows. SPX gained 0.8%, VIX eased from 21 down to 19.55, and AMD ripped 9% after Meta confirmed expanded AI spending. Home Depot's earnings beat helped set a positive tone early, and the tariff situation found some stability after the administration shifted to a narrower 10% framework. Trump's State of the Union address tonight at 21:00 ET is a wildcard for the overnight session, with tax cut plans via reconciliation expected and the push for reciprocal tariffs likely to be highlighted. The White House confirmed "a few policy announcements" are planned. Beyond that, all eyes turn to the main event: NVDA earnings after the bell Wednesday. Price reclaimed the 5-day MA (6,891) and the 100-day MA (6,888) on the bounce, but remains well below the 20-day MA (6,920) and 50-day MA (6,930), which form a significant overhead convergence zone. The 4H structure still shows a clear downtrend from the January highs near 7,080, with lower highs and lower lows intact. Tuesday's bounce brought the 4H oscillator to an overbought reading near 93, suggesting the recovery is getting stretched short-term. On the 1H, price carved out a series of higher lows off the session low, showing buying interest, but momentum is starting to flatten as we approach the 6,900-6,910 resistance zone. The directional index still reads bearish with a strong trend signal and negative direction dominant, so this rally is a counter-trend move within a larger downtrend until proven otherwise. News & Sentiment Analysis: The overnight and Asian session was relatively calm. Australia printed CPI data largely in line, while the PBoC held rates steady at 3.00% (1-year) and 3.50% (5-year) as expected. The real headline out of Asia is China's push to boost advanced chip output to 100,000 wafers within 1-2 years, which feeds directly into the US-China tech competition narrative heading into NVDA earnings. Japan's session was dominated by the yen story: USD/JPY pushed back above 156 after PM Takaichi put pressure on the BoJ to slow rate hike plans. Institutional analysis notes that leveraged funds have sharply scaled back yen shorts, and Nikkei reported that Treasury Secretary Bessent personally led a January "rate check" to stabilize the yen, suggesting concern about broader market instability from Japan's bond market. This is a background risk that's worth monitoring but not a primary driver for ES today. European data for Wednesday morning includes German GDP Final (0.6% YoY, 0.3% QoQ expected, both in line with prior), German GfK Consumer Sentiment (-23 vs -24.1 prior, a modest improvement), and the big one: Eurozone CPI Final at 05:00 ET (1.7% YoY expected, Core CPI 2.2% expected). If Eurozone CPI comes in hotter, it could ripple into US rates positioning, but the base case is in-line prints. ECB's Vujcic speaks at 05:00 ET alongside the CPI release. RBA's Bullock speaks at 03:40 ET after the Australian CPI data. Fed speakers are lighter Wednesday compared to Tuesday's parade, but still relevant. Barkin speaks at 10:40 ET, Schmid at 11:00, and Barkin & Collins return at 15:15. On Tuesday, Collins struck a cautiously optimistic tone, saying she's "watching to see if high productivity helps disinflation" and that "AI has been enhancing work, not displacing workers so far." Barkin echoed that AI will drive higher productivity and that underlying dynamics support the consumer sector. Neither gave the hawks or doves much ammunition, keeping the "higher for longer but not panicking" narrative intact. Any shift in tone Wednesday, especially from Schmid who hasn't spoken recently, could move rates. The tariff situation has entered a new phase. After the Supreme Court struck down the IEEPA-based reciprocal tariffs, the administration's 10% ad valorem framework is now in effect with exemptions for autos, aerospace, pharma, electronics, and energy. Speaker Johnson confirmed discussions on tariffs are coming, and separately Trump is pushing tax cut plans through reconciliation. The EU is pushing back on agricultural tariffs exceeding WTO limits, but the market has largely priced in this version of the tariff framework. The wildcard remains the WSJ-reported national security tariffs and potential global 15% levy that could surface at any time. Energy markets are in focus Wednesday with EIA Crude Oil Inventories at 10:30 ET. The API print was stunning: +11.4M barrels vs a 1.85M forecast, the kind of build that typically pressures crude. However, geopolitical risk from Iran nuclear talks continues to provide a floor, with oil prices advanced on Tuesday as Iran deal talks resumed amid military tensions. Brent held above $72/b and WTI near $67/b. Institutional analysis notes that CTAs are quite long crude, creating asymmetry to the downside if the EIA confirms the massive API build. If crude sells off hard on the EIA data, it could create a mild headwind for ES through energy sector drag. The AI narrative has shifted from pure fear to cautious optimism. Monday's AI disruption panic saw DoorDash, AMEX, and IBM all get hammered, but Tuesday's recovery suggests the market is differentiating between AI beneficiaries and potential losers rather than selling everything. AMD's 9% surge on Meta's expanded AI capex commitment, and institutional analysis highlighting that AI adoption metrics across sectors have reached their highest levels ever, tells us the AI infrastructure trade is alive. But the disruption angle hasn't gone away, and NVDA's earnings will be the ultimate test. The DeepSeek story, US officials reporting China used Nvidia's most advanced chips to train their latest model, adds a geopolitical dimension that goes beyond just the numbers. EPS $1.53 expected, Rev $65.91B, reporting at 16:20 ET. This is the single most important data point for the market this week. Institutional positioning analysis suggests markets are stabilizing, but the backdrop remains fragile. The read is that positioning got too bearish too fast during Monday's selloff, which enabled Tuesday's squeeze, but the broader uncertainties around tariffs, AI disruption, and Fed policy haven't resolved. Gold retreated 1.6% on Tuesday after four straight days of gains, with profit-taking as risk appetite returned, but remains above $5,000/oz with institutional flows still favoring haven assets. The options market still shows elevated put skew heading into NVDA, and VIX at 19.55, while down sharply from 21+, remains above the pre-panic levels. From a positioning standpoint, Tuesday's recovery looks like a short-covering rally within a broader pullback. The composite technical indicators have shifted from 60% sell to a more neutral 24% sell, with short-term signals mixed and medium-term still bearish. The weekly structure remains under pressure with the downtrend from January highs intact. This sets up Wednesday as a "wait for NVDA" session where the morning and afternoon are likely range-bound as traders avoid taking directional bets ahead of the 16:20 ET earnings release. Forecast: • Overnight: Trump SOTU at 21:00 ET could inject volatility into the Globex session if any surprise tariff or policy announcements land. After that settles, European data (German GDP, Eurozone CPI) provides early direction but expect mostly contained moves as market positions for NVDA • Morning Session: Choppy and range-bound. EIA Crude at 10:30 could create a brief move, and Fed's Barkin (10:40) and Schmid (11:00) add event risk, but traders will be reluctant to commit ahead of NVDA • Afternoon: Pre-NVDA positioning dominates. Expect declining volume and tightening range as the 16:20 ET earnings approach. Barkin & Collins at 15:15 is the last Fed event before NVDA • Daily Close: Depends entirely on NVDA reaction. Pre-report close likely near flat. After-hours could see 50-100+ point ES move depending on guidance • Expected Range: 6,855 to 6,947 (based on statistical average daily range of ~94 points, centered on current price) • Most Likely Path: Overnight drift within 6,885-6,910, morning test of 6,920 area that fades back to 6,890-6,900, afternoon compression into 6,895-6,910, then explosive move after NVDA earnings Wednesday Events: • 02:00: German GDP Final YoY (0.6% exp), QoQ (0.3% exp), GfK Consumer Sentiment (-23 exp, -24.1 prior) • 02:45: French Consumer Confidence (90 exp) • 03:40: RBA's Bullock Speaks • 05:00: Eurozone CPI YoY Final (1.7% exp), Core CPI (2.2% exp), ECB's Vujcic Speaks • 10:30: EIA Crude Oil Inventories (1.925M exp, API showed +11.4M) • 10:40: Fed's Barkin Speaks • 11:00: Fed's Schmid Speaks • 15:15: Fed's Barkin & Collins Speak • 16:20: NVDA Earnings (EPS $1.53 exp, Rev $65.91B exp) - THE EVENT • After hours: Market reaction to NVDA guidance and commentary on AI demand, China chip exports, data center capex • Tuesday 21:00 ET: Trump State of the Union Address (overnight risk event, WH confirmed policy announcements) Resistance: • 6,940-6,944 – 40-Day MA (6,939) / Stochastic 70% level (6,944). Upper ceiling, only reachable on a strong pre-NVDA bid or blowout earnings • 6,920-6,930 – 20-Day MA (6,920) / 50-Day MA (6,930) / Monday's PDH (6,930.25). THE key zone. This is where the short-term moving averages converge and create a wall, and where Monday's session high sits. A close above here changes the bearish narrative • 6,910-6,912 – Tuesday's Session High (6,910.50) / Computed Pivot R1 (6,912). First overhead hurdle, already tested and rejected once on Tuesday • 6,904-6,907 – Target Price (6,905) / Current Trading Zone. This is where price is sitting now, acting as the battleground between recovery bulls and trend bears • 6,891-6,895 – 5-Day MA (6,891) / 100-Day MA (6,888). Recently reclaimed support that needs to hold for the bullish bounce thesis to remain valid Support: • 6,878-6,882 – Computed Pivot Point (6,882) / VWAP area. First pullback level, where intraday buyers should step in if the bounce is genuine • 6,855-6,863 – Prior Close area / Session equilibrium. The zone where Tuesday's session found balance before the afternoon push higher • 6,848-6,851 – Computed Pivot S1 (6,851) / Stochastic 30% level (6,849). Key support, a break below here reopens the bear case for a retest of the lows • 6,828-6,833 – Tuesday's Low (6,828.50) / Monday's PDL (6,832.75). Double bottom area, if this breaks it's a significant bearish signal • 6,797-6,812 – Computed Pivot S2 (6,797) / 1 SD Support (6,812). Deep support, only in play on a terrible NVDA miss or exogenous shock How I'm seeing it: • Leaning neutral-to-bearish pre-NVDA. The bounce from 6,828 was impressive but we're still in a 4H downtrend with lower highs, and the 20/50 DMA confluence at 6,920-6,930 is significant overhead resistance • The 4H oscillator at 93 is overbought after the 73-point recovery, suggesting limited upside in the morning session before some digestion is needed • If ES pushes into the 6,920-6,930 zone, expect strong selling pressure from the moving average convergence. This is the fade zone unless volume confirms a breakout • If ES pulls back to 6,878-6,882 (pivot point area) and holds, it's constructive. Below 6,851, the bull case weakens significantly • NVDA is the binary catalyst. The market will likely trade in a compressed 30-40 point range during the regular session, then explode after 16:20 ET. The AI narrative (disruption fears vs capex spending) makes this a 50-100+ point post-earnings event • Post-NVDA scenarios: Beat + strong guidance = squeeze to 6,950+ and potential retest of 7,000. Miss or weak guidance = flush back to 6,830 and potentially 6,797 (S2) • Primary Setup: Short from 6,920-6,930, stop 6,948, targeting 6,882-6,870 first, then 6,851 (S1). Fading into the 20/50-DMA confluence with 4H overbought conditions and pre-NVDA uncertainty capping upside. If not triggered by NVDA time, reassess post-earnings Market is in a holding pattern ahead of the biggest earnings event of the week. The technical structure says sell the rally until 6,930 is reclaimed, but NVDA changes everything. Should be an interesting one. Good Luck !!!