ES (SPX, SPY) Analysis, Key-Zones, Setup for Thu (Feb 26)E-mini S&P 500 FuturesCME_MINI:ES1!MyAlgoIndexWednesday was all about NVDA, and they delivered. EPS came in at $1.62 vs $1.53 expected, revenue $68.13B vs $66.21B consensus, and the real jaw-dropper was FQ1 guidance at $78B, roughly $6B above the Street's $72B estimate. Data Center revenue hit a record $62.3B, up 75% YoY and 22% sequentially, with hyperscalers accounting for just over 50% of that segment. But the after-hours reaction told a different story. NVDA initially popped 3.5%, then faded. S&P futures actually dipped 0.2% as Salesforce tumbled 4%+ on weak FY2027 revenue guidance, reigniting fears about the software sector. The market got its "beat" but couldn't sustain the enthusiasm. Meanwhile, Trump's SOTU Tuesday night ran nearly two hours, the longest in modern history, where he doubled down on tariffs, criticized the Supreme Court's ruling against his IEEPA-based reciprocal tariffs, and announced the baseline tariff is being raised from 10% to 15%. Wednesday's session already digested that tariff escalation with the gap-down open to 6,930.50, but the market managed to rally back and close well above the lows. On the technical side, Wednesday's regular session opened at 6,930.50, gapping down 31 points from the prior close at 6,961.75. From there, bulls stepped in hard, driving a nearly 40-point intraday rally to a session high of 6,969.25 before profit-taking pulled price back to close at 6,951.75. The session was bullish from the RTH open, reclaiming all the short-term moving averages during the week's bounce from 6,828.50. Price now sits above the 5-DMA (6,917.55), 20-DMA (6,920.44), 50-DMA (6,932.39), and 100-DMA (6,889.71). That's constructive from a trend perspective, but the late-day pullback from 6,969 and the inability to hold near highs into the close is worth noting. The 4H oscillator at 92.62 and the 1H at 94.97 are screaming overbought after the 141-point rally from Monday's low to Wednesday's high. The weekly oscillator at 90.46 adds to the picture of a move that's getting stretched. The directional index still reads bearish with -DI at 19.14 dominating +DI at 13.40, telling us the broader downtrend structure hasn't flipped yet despite the recovery. The 4H confirmed a break of structure near 6,950, and the Fib extensions project 1.272 at 7,018.75 and 1.618 at 7,065.25, but those targets require sustained momentum that overbought oscillators may not support near-term. The composite technical indicators show a marginal 32% buy reading with minimum strength, essentially a market in limbo. News & Sentiment Analysis: The NVDA earnings dominated the post-close session Wednesday. The headline numbers were undeniably strong: $1.62 EPS (beating $1.53), $68.13B revenue (beating $66.21B), and record data center revenue of $62.3B. The first-quarter guidance of $78B, plus or minus 2%, was the real bullish catalyst, coming in roughly $6B above consensus estimates. Hyperscaler capex continues to accelerate, with institutional analysis noting consensus estimates now project $667 billion in hyperscaler capex for 2026, $127 billion higher than at the start of 4Q earnings season and representing 62% growth versus 2025. Hyperscaler capex is now on pace to exceed 90% of cash flows this year, above the share during the Dot Com Boom era. That said, institutional analysis also warns that a deceleration in the quarterly growth rate is likely in late 2026, and the revenue growth of some AI infrastructure stocks appears vulnerable to a slowdown in capex growth. However, the NVDA beat came with caveats that tempered the enthusiasm. FY 2026 gross margin was impacted by a $4.5 billion charge associated with H20 excess inventory and purchase obligations. Any H200 shipped under the new licensing program will be subject to a 25% tariff upon importation into the US, adding a cost headwind. And the company is still negotiating its OpenAI investment, which remains unfinalized. Professional visualization was a standout at $1.32B (+159% YoY), but automotive missed at $604M vs $654.8M expected. The muted after-hours reaction, with the stock initially rising 3.5% then fading, suggests the beat-and-raise was largely priced in after the week's relief rally, and investors are now focused on the H20 inventory charge and tariff headwinds. Salesforce provided the real negative catalyst after the bell, tumbling 4%+ on disappointing FY2027 revenue guidance. This plays directly into the AI disruption narrative that institutional analysis has been tracking: "Phase 2" AI infrastructure stocks have continued to perform well alongside strong capex guidance, while "Phase 3" companies with the potential to generate AI-enabled revenues have suffered as investors price in growing disruption risk. "Phase 4" productivity companies have traded roughly sideways. The CRM miss reinforces fears that the software sector, particularly companies expected to benefit from AI integration, may face longer timelines to monetization than investors hoped. Trump's State of the Union address ran nearly two hours and contained significant market-moving content. He defended his tariff agenda aggressively, criticizing the Supreme Court justices (who were sitting feet away) for striking down his IEEPA-based reciprocal tariffs, calling the ruling "disappointing." More importantly, he announced the baseline tariff is being raised from 10% to 15%, a material escalation that Wednesday's session absorbed via the gap-down open but could continue to weigh on sentiment. He also doubled down on his vision to replace income tax with tariff revenues, touted tax breaks on tips and overtime through his "great big beautiful bill," and announced "Trump accounts" for children. The tariff escalation from 10% to 15% is the most immediately actionable piece, as it adds a fresh layer of trade uncertainty just as markets were digesting the NVDA results. The IMF released its Article IV review of the US economy Wednesday afternoon, and the findings are worth noting for the macro backdrop. The IMF sees US growth at 2.4% for 2026 in line with its January WEO forecast, with the unemployment rate remaining near 4% through 2026-2027. The review noted that pass-through of tariffs to consumer prices could be lower than expected, leading to more front-loaded disinflation and stronger activity, but trade uncertainty could drag on activity. Core PCE is projected to reach 2% in early 2027. The IMF also warned that the US current account deficit will remain large at 3.5-4% of GDP due to non-resident financial inflows and growing external borrowing, and that an abrupt shift in portfolio preferences might result in disorderly external rebalancing. They emphasized that Fed credibility represents a highly valuable asset that should be carefully guarded. In the FX space, the yen story continued to develop. New BoJ board nominations clearly signal PM Takaichi's preference for an accommodative monetary environment. Institutional analysis notes the direct impact of replacing two board members on near-term monetary policy decisions will be limited, but the appointments signal increased likelihood that a reflationist figure could succeed Governor Ueda when his term expires in April 2028. The main scenario of an additional April rate hike remains intact, but the risk that the BoJ might hesitate to raise rates in deference to the administration's wishes is growing. USDJPY is testing the 156.50-75 area, the bottom of the Ichimoku cloud. FX analysis from institutional desks notes that while BoJ nominees are on the reflationary side, they won't have a direct say in fiscal measures, so the sell-off in ultra-long JGBs feels overdone. For ES, this is a secondary risk factor, but sustained yen weakness could feed into global risk appetite dynamics. Energy markets remain in focus. Institutional analysis identifies three factors supporting crude: cold weather production shut-ins (US production fell 300,000 bpd to 13.54mbpd in January), disruptions in Russia and Kazakhstan (drone attacks impacting Russian production, power outage at Tengiz oil field in Kazakhstan), and OPEC compliance improvements. However, 2026 demand growth has been revised lower to 1.2mbpd from 1.3mbpd previously, and crude is expected to dip toward mid-$60s by mid-year. The massive API build of +11.4M barrels reported Tuesday still hangs over the market, and EIA confirmation on Wednesday (if it came in similarly bearish) could pressure crude further. WTI near $65.75 and Brent holding above $72. For ES, energy sector performance is a modest headwind if crude continues to fade from here. Institutional positioning analysis heading into Thursday suggests a market that's digested the NVDA beat but remains cautious. The pre-NVDA VIX compression from 21+ to 17.94 reflected aggressive de-risking of hedges, but with tariffs escalating and software concerns resurfacing, the floor under volatility may be higher than the current reading implies. Institutional analysis from FX desks noted that the downside risks from an NVDA miss were larger than the upside from a beat, and the muted reaction to the beat validates that asymmetry. The market is now in a "show me what's next" phase, with the initial NVDA euphoria unable to sustain itself. Thursday's data calendar is lighter. Initial Jobless Claims at 08:30 ET (216k expected vs 206k prior) is the main US data point, alongside Continued Claims (1.858M expected vs 1.869M prior). ECB President Lagarde speaks at 03:30 ET, which could move EUR/USD if she signals any shift in the rate path, followed by ECB's Dolenc and BoE's Lombardelli at 04:00. The US 7-Year auction at 13:00 is worth watching for demand signals after recent Treasury market volatility. Overnight, Tokyo CPI at 18:30 could impact JPY positioning ahead of the Asian session. No major earnings are scheduled Thursday. Forecast: • Overnight: Expect modest downside pressure from CRM weakness and NVDA's fading after-hours reaction. The tariff escalation was already absorbed Wednesday, but remains a lingering headwind. Globex likely tests the 6,935-6,940 area • Morning Session: Initial Jobless Claims at 08:30 is the catalyst. A print above 220k could trigger a risk-off move toward 6,920-6,932 support. Below 210k keeps the bull case alive. Expect choppy action as the market digests NVDA's mixed signals (strong numbers, weak price action) • Afternoon: 7-Year auction at 13:00 provides mild event risk. If yields rise on weak demand, it could weigh on equities. Expect declining conviction as the post-NVDA narrative settles • Daily Close: Likely modestly lower, in the 6,935-6,950 range. The tariff headwind and CRM-led software weakness should offset any NVDA tailwind • Expected Range: 6,900 to 6,995 (based on statistical average daily range of 92 points, centered near current levels) • Most Likely Path: Overnight fade to 6,935-6,940, morning test of 6,920-6,932 (MA confluence) on claims data, potential bounce to 6,950-6,960 if claims are benign, afternoon drift back toward 6,940 equilibrium Thursday Events: • 03:30: ECB's Pres. Lagarde Speaks • 04:00: Eurozone Money-M3 Annual Growth (2.9% exp, 2.8% prior) • 04:00: ECB's Dolenc Speaks, BoE's Lombardelli Speaks • 08:30: US Initial Jobless Claims (216k exp, 206k prior) • 08:30: US Continued Jobless Claims (1.858M exp, 1.869M prior) • 08:30: Canadian Current Account (-8.21B exp, -9.68B prior) • 13:00: US 7-Year Auction (prior yield 4.018%, bid-to-cover 2.450) • 18:30: Tokyo CPI Overall (1.4% exp, 1.5% prior), Core CPI (1.7% exp, 2.0% prior) • Post-market: Continued digestion of NVDA earnings, CRM guidance, and 15% tariff baseline Resistance: • 6,998-7,006 – Computed Pivot R1 (6,998.25) / 1 SD Resistance (7,002.72). Major overhead ceiling, only reachable on strong post-NVDA follow-through buying. This zone represents the upper boundary of the statistical expected range • 6,974-6,978 – Target Price (6,974.61) / Upper Trading Zone. First significant hurdle above Wednesday's range. A sustained break here signals bulls are in control despite the mixed after-hours signals • 6,965-6,969 – Wednesday's Session High (6,969.25) / PDH (6,965.75) / Y-VAH (6,965.50). Triple confluence overhead, already rejected once on Wednesday's late-day fade from the highs. This is the initial test for any morning strength • 6,950-6,956 – Y-POC (6,956.50) / VWAP (6,948.25) / Pivot Point (6,945.25). The battleground zone where price currently sits. Holding above here keeps the bull case intact • 6,939-6,945 – 40-DMA (6,939.19) / Stochastic 70% level (6,933.50) / Y-VAL (6,940.50). Recently reclaimed support, first zone where buyers should engage on a pullback Support: • 6,929-6,933 – 50-DMA (6,932.39) / PDL (6,929.75) / 38.2% Fib Retracement (6,931.65). First significant support, where the 50-DMA and Wednesday's session low converge. A break below here signals the bounce is faltering • 6,917-6,921 – 5-DMA (6,917.55) / 20-DMA (6,920.44) / RSI 50% level (6,919.77) / 18-DMA (6,911.81). The MA confluence zone, a critical support shelf where four moving averages converge. This is where the bull/bear debate intensifies • 6,889-6,895 – 100-DMA (6,889.71) / ONL (6,892.25). Key structural support from the weekly bounce. A break below here reopens the bear case toward the week's lows • 6,853-6,856 – Computed Pivot S2 (6,853.75) / Stochastic 50% level (6,881.50). Deep support, in play on a significant risk-off move from tariff escalation or unexpected data shock • 6,828-6,833 – Monday's Low (6,828.50) / Weekly Low. The line in the sand for the bullish recovery. A retest here would signal complete failure of the NVDA-driven bounce How I'm seeing it: • Leaning neutral-to-bearish for Thursday. The NVDA beat was impressive on paper, but the market's inability to sustain the after-hours rally, combined with CRM's weak guidance and the lingering 15% tariff backdrop, creates a mixed-to-negative setup for the regular session • The 4H oscillator at 92.62 and 1H at 94.97 are both deep in overbought territory after the 141-point recovery from Monday's low. Wednesday's session rallied from a 6,930.50 open to 6,969.25, but the late-day fade back to 6,951.75 shows sellers emerging near the highs • If ES gaps below 6,945 on the tariff/CRM headlines, watch for a test of the 6,929-6,933 zone (50-DMA / PDL). Holding there keeps the weekly recovery structure valid. Below 6,917-6,921 (MA confluence), the bounce loses credibility • Above 6,965-6,969 (Wednesday's high / PDH), bulls gain the upper hand and 6,974-6,978 (target price) comes into play. This scenario requires strong NVDA follow-through buying that overcomes the tariff headwind • The directional index still shows bearish direction dominant (-DI > +DI) despite the recovery, confirming this is still a counter-trend rally within a broader pullback from the January highs. Composite indicators at a marginal 32% buy with minimum strength support a cautious stance • Primary Setup: Short from 6,965-6,975, stop 6,998, targeting 6,932 first then 6,920 (MA confluence). Fading into the PDH/target price zone with overbought 4H/1H conditions, late-day rejection from 6,969, tariff escalation, and CRM-led software weakness providing the catalyst for mean reversion The NVDA catalyst has come and gone, the market got its beat but couldn't hold the gains, and now we're dealing with 15% baseline tariffs and software sector cracks. The easy money on the bounce has likely been made. Should be a tug-of-war kind of session. Good Luck !!!