ES (SPX, SPY) Analysis, Key-Zones, Setup for Fri (Feb 27)E-mini S&P 500 FuturesCME_MINI:ES1!MyAlgoIndexThursday was a reality check. NVDA delivered the beat everyone was waiting for, but the market's response told a different story. ES opened at 6,965, right at Wednesday's highs, tested 6,969.25 early, and then sellers took control for the rest of the session. The close near 6,920 gave back Wednesday's entire rally, and the Globex session has extended that selling pressure down to the 6,882-6,893 area. The NVDA beat-and-raise that was supposed to be the bullish catalyst turned into a "sell the news" event, with the stock dropping 5.5% on the regular session despite the headline numbers being strong. Add in the 15% baseline tariff backdrop, CRM's weak guidance, and now the Trump-Xi summit preparations faltering, and the bulls have very little to work with heading into Friday. On the technical side, Thursday's regular session opened at 6,965.00 and immediately tested the prior day's high at 6,969.25 before selling off throughout the session to close at approximately 6,920. That's a 45-point intraday range that resolved decisively to the downside. The Globex session has extended the damage further, with price trading down to 6,882.50 and currently hovering in the 6,888-6,893 zone. Price has now broken below ALL short-term moving averages: the 5-DMA (6,911.65), 20-DMA (6,918.96), 50-DMA (6,931.80), and is testing the 100-DMA (6,889.41) which had been a key support reference during Wednesday's bounce. The 200-DMA sits much lower at 6,656.42, so there's a significant air pocket if the 100-DMA fails. The 4H oscillator has rolled over sharply from Wednesday's overbought reading of 92.62 down to 75.74, confirming the momentum shift. The 1H oscillator similarly declined from 94.97 to 80.19 and is now likely accelerating lower on the Globex selloff. The weekly oscillator remains elevated at 90.46, suggesting the weekly structure may need to unwind further. The directional index continues to show bearish dominance with -DI at 19.72 vs +DI at 12.65, and the ADX at 33.36 indicates this is a trending move, not a choppy range. The composite technical indicators have flipped from a marginal 32% buy to an 8% sell reading with minimum strength and weakest direction, confirming a broad technical deterioration. News & Sentiment Analysis: The NVDA post-earnings reaction defined Thursday's session. Despite beating on every metric, EPS $1.62 vs $1.53 expected, revenue $68.13B vs $66.21B, data center revenue at a record $62.3B, and FQ1 guidance of $78B roughly $6B above consensus, the stock fell 5.5% on Thursday. The "buy the rumor, sell the news" dynamic played out exactly as you'd expect. Institutional analysis noted that the downside risks from an NVDA miss were larger than the upside from a beat, and the muted-then-negative reaction validated that asymmetry. The $4.5B H20 excess inventory charge, the 25% tariff on any H200 shipped under the new licensing program, and the unfinalized OpenAI investment all gave bears enough ammunition to overwhelm the headline beat. The broader Magnificent Seven lost ground, and Salesforce continued its slide on weak FY2027 guidance, reinforcing the narrative that software companies expected to benefit from AI integration face longer monetization timelines than investors hoped. Fed commentary was a mixed bag Thursday. Fed's Miran delivered a notably dovish tone, stating that he thinks rates need to be cut by about a percent this year, that he does not think the US has an inflation problem, that prices right now seem stable, and that AI will be profoundly disinflationary. He also noted labor market data has been quite a bit better but cautioned it is too early to sound the all clear. On the regulatory side, he said banks are overregulated and harm credit creation, and expressed support for Bowman's agenda on easing bank capital requirements. Separately, Fed's Goolsbee struck a more cautious tone, saying the economy has been solid and the job market is stable, but adding he wants to be careful and that rates can come down but he does not want to front-load before inflation eases. The tension between these two views, one pushing for aggressive cuts and the other urging patience, reflects the broader Fed uncertainty that keeps markets on edge. Jobless claims data came in better than expected Thursday morning. Initial claims printed 212k versus 216k expected and 206k prior (revised to 208k), while continued claims came in at 1.833M versus 1.858M expected and 1.869M prior (revised to 1.864M). The labor market remains resilient, which under normal circumstances would be a positive signal but in the current environment reinforces the Fed's cautious stance on rate cuts. Kansas City Fed Manufacturing surprised to the upside at 10 versus -2 prior, and the Composite Index hit 5 versus 0 prior, suggesting regional manufacturing is seeing a rebound. The 7-Year Treasury auction was solid with a yield of 3.790% (down from 4.018% prior) and a bid-to-cover of 2.500 versus 2.450 prior, indicating healthy demand for duration. The 30-year fixed mortgage rate averaged 5.98% in the week of February 26th, the lowest since September 2022, which could provide some support for the housing sector. Geopolitical risks escalated sharply on Thursday. The US-Iran nuclear talks in Geneva dominated headlines, with US envoys Witkoff and Kushner reportedly disappointed by what they heard from Iranians in morning negotiations. The US is demanding Iran destroy its three main nuclear sites at Fordow, Natanz, and Isfahan and hand over all remaining enriched uranium. Trump set a March 1-6 deadline for Tehran to reach an agreement or face military action. Prediction market probability of a US strike on Iran by end of March has been stable at around 60%. Six additional US refueling tankers are en route to Israel's Ben Gurion Airport as part of a broader US military buildup in the Middle East, following earlier arrivals of F-22 and F-35 fighter jets. This is a meaningful tail risk for markets heading into next week, with oil likely to bid up on any escalation. Separately, Russia's Dmitriev held talks with US officials in Geneva, adding another layer of diplomatic complexity. US-China trade tensions continued to simmer. The Trump-Xi summit preparations are faltering as planning gaps unsettle Beijing, according to SCMP. The US ITC is undertaking a new fact-finding investigation to examine the impact of revoking permanent normal trade relations for all products from China, which would be a massive escalation beyond the current 15% baseline tariff. China's Commerce Ministry responded by saying both sides maintain continuous communications at all levels and are willing to implement the consensus reached in February 4th call. Meanwhile, Trump's administration is looking into ways to keep billions in tariff revenue that the Supreme Court ruled was illegally collected, with ideas including redesigning duties under new legal authority. With more than $133 billion at stake, the administration is navigating a legal and political minefield. Institutional analysis paints a cautious picture. The risk indicator reading for Thursday's afternoon session was Mild Risk OFF, with ES weakness and VIX strength being the biggest contributors. The Fear and Greed Index sits at 44, firmly in "Fear" territory, down from 45 Neutral the previous close, and compared to 57 Greed just one month ago. Institutional analysis notes that Q4 GDP slowed to 1.4% but private final demand remained firm at 2.4%, suggesting the headline miss was largely driven by a sharper-than-expected pullback in government spending tied to the shutdown. As the temporary drag from government spending unwinds in Q1, there is upside risk to a 2.6% growth forecast, though winter storms could temper some of that strength. In the FX space, institutional analysis notes that improved sentiment has weighed on the dollar over the past 24 hours, but any Iran escalation looks like the most plausible catalyst for a broader dollar rally. The yen continues to be the weakest link in G10. BoJ Governor Ueda struck a mildly hawkish tone overnight, and markets nudged April hike pricing slightly higher with expectations rising by around 3bp to roughly 18bp. The bias among institutional desks remains to stay short USD/JPY with key support around 154, though month-end rebalancing flows could create noise. Separately, institutional research suggests the BoJ has limited scope to tighten further, projecting just one additional 25bp hike in Q2 to a peak rate of 1.0%. Options and positioning data shows net dealer premium at roughly $193.55B with 0DTE premium at about $2.30B, indicating dealers are holding a significant amount of premium exposure. The implied volatility response has been relatively muted compared to the actual spot move lower, with options markets only slightly under-reacting to the price decline. That kind of complacency could flip quickly if the Globex selloff extends into Friday's regular session. Energy markets remain a wildcard. EIA Natural Gas came in at -52B versus -50B forecast and -144B prior. Oil declined 0.3% to settle at $65.21 a barrel after Oman, acting as mediator, said the US and Iran made significant progress in Switzerland and will continue nuclear talks next week. However, the military buildup in the Middle East and the March 1-6 deadline create a binary risk: either a deal is reached and oil pulls back, or talks collapse and crude spikes. Brent is trading near $70. The asymmetry is tilted to the upside for oil given the current positioning and geopolitical backdrop. On the tech front, Meta's internal chip design efforts hit roadblocks as the company encounters issues with AI chips it is developing internally. Meta abandoned the most advanced chip it was developing for training AI models last week, citing design issues. This highlights the difficulty that tech giants face in developing AI chips to compete with Nvidia's market-dominating offerings, and actually reinforces NVDA's moat despite the stock's selloff. Broadcom shipped a 3.5D face-to-face compute SOC and new AI chip to Fujitsu, planning a wider rollout. The AI infrastructure buildout continues even as the stocks come under pressure. Friday's data calendar features the marquee release: US PCE Price Index at 08:30 ET. Core PCE MoM is expected at 0.3% versus 0.2% prior, and Core PCE YoY at 2.6% versus 2.8% prior. This is the Fed's preferred inflation gauge, and any upside surprise could extend the selloff by pushing back rate cut expectations further. Personal Income is expected at 0.4% versus 0.9% prior, and Personal Spending at 0.1% versus 0.7% prior, the spending slowdown being particularly noteworthy. Goods Trade Balance at 08:30, Retail Inventories at 08:30, and Michigan Consumer Sentiment (Final) at 10:00 (expected 64.0) round out the morning data. ECB's Nagel and BoE's Lombardelli speak in the European session. Forecast: • Overnight: Bearish pressure continues. The Globex selloff to 6,882-6,893 suggests significant liquidation. Price testing the 100-DMA (6,889.41), and if it breaks, the next support zone is 6,870 (Pivot S1). Pre-PCE positioning likely keeps sellers in control • Morning Session: PCE at 08:30 is the make-or-break catalyst. A hot core PCE above 0.3% MoM could drive ES to test 6,850-6,870. An in-line or cooler print could trigger a relief bounce to 6,910-6,920 (prior close / 20-DMA area). Could be a volatile 15-minute window around the release. Michigan Consumer Sentiment at 10:00 provides a secondary catalyst later in the morning • Afternoon: If the morning PCE and Michigan Sentiment reactions establish a direction, the afternoon likely follows through with declining volume. End-of-month rebalancing flows could add volatility in the last hour • Daily Close: Expecting a close in the 6,860-6,910 range depending on PCE. Bearish bias with the path of least resistance lower, but a soft PCE print could create a bounce • Expected Range: 6,825 to 6,935 (based on 14-Day ADR of 96.93 points, centered around the current Globex level) • Most Likely Path: Globex holds 6,880-6,890 into the open, PCE at 08:30 determines direction. Hot print sends price to test 6,855-6,870 (Pivot S1 / NYAM Low), soft print bounces to 6,910-6,920 (20-DMA / prior close), afternoon drift back toward 6,880-6,890 equilibrium as sellers fade any rally Friday Events: • 02:00: German Import Prices MoM (0.6% forecast, -0.1% prior) • 02:45: French HICP YoY Prelim (0.8 forecast, 0.4% prior), French CPI YoY NSA Prelim (0.8% forecast, 0.3% prior) • 03:00: Swiss GDP YoY (0.5% forecast, 0.5% prior), Swiss KOF Indicator • 03:55: German Unemployment Rate (6.2% forecast, 6.2% prior), German Unemployment Change (15k forecast, 11k prior) • 05:00: Eurozone CPI Flash YoY (2.3% forecast, 2.5% prior), Core CPI Flash YoY (2.5% forecast, 2.7% prior) • 08:30: US PCE Price Index MoM (0.3% forecast, 0.3% prior), Core PCE MoM (0.3% forecast, 0.2% prior) • 08:30: Core PCE YoY (2.6% forecast, 2.8% prior), Personal Income (0.4% forecast, 0.9% prior) • 08:30: Personal Spending (0.1% forecast, 0.7% prior), Goods Trade Balance, Retail Inventories • 10:00: Michigan Consumer Sentiment Final (64.0 forecast), Michigan Inflation Expectations • 19:01: UK GfK Consumer Confidence (-15 forecast, -16 prior) • Post-market: BRK earnings (Sat 08:00 ET, EPS $5.19, Rev $95.3B), month-end rebalancing, Iran deadline watch Resistance: • 6,998-7,006 – Computed pivot R1 (6,970.25) / 1 SD resistance. Major overhead, not likely in play Friday given the technical damage • 6,965-6,970 – Thursday's High (6,969.25) / PDH. Only in play on a complete sentiment reversal. This is where the selloff originated and represents the ceiling for any meaningful bounce • 6,945-6,950 – Computed pivot area / Y-POC / VWAP. Mid-session equilibrium zone from Thursday. Only reachable on a significantly soft PCE print that triggers aggressive short covering • 6,931-6,935 – 50-DMA (6,931.80) / Thursday's low (6,941.25) area. First meaningful resistance above, price would need to reclaim this zone to signal any short-term bottoming. This was yesterday's support that became resistance on the breakdown • 6,917-6,921 – Prior Day Close (6,920.00) / 20-DMA (6,918.96) / 5-DMA (6,911.65). The MA confluence zone that price broke down through Thursday. A reclaim here would signal the selloff is overdone, and strong selling interest should show up on any test Support: • 6,882-6,893 – Globex Low (6,882.50) / 100-DMA (6,889.41) / ONL area. The first line of defense being tested right now. The 100-DMA has been a magnet, and a sustained break below opens a path to deeper support. Watching for a reaction here at the open • 6,865-6,871 – Computed Pivot S1 (6,870.25) / NYAM Low (6,870.75). Next significant support below the 100-DMA. This aligns with session structure from the 30M chart and represents the first downside target if the Globex low breaks • 6,845-6,855 – Stochastic 50% level (6,881.50 area) / 61.8% Fib Retracement zone. Deeper pullback target, in play on a hot PCE print. This zone would represent a full retracement of the weekly bounce from Monday's low • 6,820-6,828 – Computed Pivot S2 (6,820.50) / Monday's Weekly Low (6,828.50). The critical level for the entire weekly recovery. A break below here negates the entire NVDA-driven bounce and reopens the bear case toward new lows • 6,790-6,800 – Computed Pivot S3 (6,770.75) / Psychological support. Extreme downside target, only in play on a combination of hot PCE and geopolitical escalation How I'm seeing it: • Leaning bearish for Friday. Thursday's NVDA sell-the-news reaction, the breakdown below all short-term moving averages, and the Globex extension to the 100-DMA all confirm the bears have seized control. The composite indicators flipping from 32% buy to 8% sell with weakest direction tells the story • The PCE report at 08:30 is everything. Core PCE YoY is expected to decelerate from 2.8% to 2.6%, which would be constructive. But the MoM expected at 0.3% versus 0.2% prior shows the month-over-month pace is accelerating. Any upside surprise (0.4%+ MoM) would be devastating for risk assets given the already fragile technical picture • If ES gaps below 6,880 on PCE, watch for a quick test of the 6,865-6,871 zone (Pivot S1 / NYAM Low). That's the first real demand zone below the 100-DMA. Below there, 6,828 (Monday's weekly low) becomes the line in the sand • A soft PCE (0.2% MoM or lower) could trigger a relief bounce to the 6,917-6,921 zone (prior close / MA confluence), but rallies are likely to get sold given the technical breakdown. The path of least resistance is lower until proven otherwise • End-of-month rebalancing flows could add volatility in the afternoon. Pension fund rebalancing into month-end has historically been a factor, and given the selloff this week, there could be some buy flows. Worth keeping in mind but probably not enough to change the overall picture • The Iran deadline of March 1-6 is the elephant in the room for next week. A breakdown in talks over the weekend could gap ES lower on Sunday night. Conversely, a deal announcement would be a significant risk-on catalyst • Primary Setup: Short from 6,910-6,920, stop 6,945, targeting 6,870 first then 6,828 (weekly low). Fading any PCE-driven bounce into the prior close / 20-DMA resistance zone, with the technical breakdown, overbought weekly oscillator unwinding, and tariff/geopolitical headwinds providing the setup rationale The weekly candle is shaping up as a potential reversal. Monday's low at 6,828, the mid-week NVDA-driven bounce to 6,969, and now the selloff back toward 6,880 creates a wide-range, indecisive structure. Friday's close will determine whether this becomes a bearish engulfing pattern or a recovery holds the weekly open. With PCE on deck and Iran in the background, volatility is the only certainty. Good Luck !!!