ES (SPX, SPY) Analysis, Key-Zones, Setup for Thu (Mar 5)E-mini S&P 500 FuturesCME_MINI:ES1!MyAlgoIndexWednesday delivered one of the more impressive intraday reversals we've seen in recent weeks. ES gapped down to the 6,782 area in pre-market on escalating Iran conflict headlines, then staged a nearly 100-point rally throughout the regular session fueled by a massive ISM Services beat and a dovish Fed commentary from Miran. AVGO delivered a blowout after the close with Q2 guidance of $22B versus $20.53B expected, AI semiconductor revenue hit $10.7B, and the company announced a $10B buyback. But the Globex session has been unable to extend Wednesday's gains. ES opened the overnight session around 6,883, pushed up to 6,900.75 before fading back sharply. Price has been drifting lower throughout the Asia session and currently sits near the 6,862 area, basically giving back all of Thursday's overnight gains and trading below Wednesday's settlement. The geopolitical backdrop remains the dominant overhang heading into Thursday. Late Wednesday, the NYT reported that Iranian operatives have made an offer to discuss terms for ending the war, the first diplomatic signal from Tehran. However, the US reportedly hasn't responded yet per Axios. US Energy Secretary Wright stated the US Navy will escort ships through the Straits of Hormuz when the time is right, and Trump posted on Truth Social that the US will ensure the free flow of energy to the world. Meanwhile, thousands of Iraqi Kurds have launched a ground offensive in Iran (FOX), Israel carried out a broad wave of strikes overnight, and Iran has threatened to target the Israeli nuclear site of Dimona if regime change is sought. Reports of blasts in Doha and Dubai with missiles intercepted by Saudi Arabia signal the conflict is widening beyond Iran's borders. On the technical side, Wednesday's regular session opened near 6,810 after the pre-market selloff to 6,782, then rallied throughout the day to close near 6,876. That's a wide-range day that resolved to the upside, recovering most of Tuesday's selloff. However, price remains below the 20-DMA (6,895.25) and 100-DMA (6,890.91), which now form a resistance confluence in the 6,890-6,900 zone. The 5-DMA sits at 6,866.95, providing immediate overhead reference. The 50-DMA at 6,933.83 is significantly higher and represents the first major structural resistance above. The 200-DMA remains well below at 6,676.28, so the broader trend support is intact. The 14-Day RSI has dropped to 45.45, now sliding below the neutral 50-line, giving bears a marginal momentum edge. The Stochastic %K at 48.56 and %D at 46.50 are similarly below neutral and pointing lower. The ADX at 35.16 indicates a trending environment, with -DI at 21.76 versus +DI at 9.27 confirming the bears maintain structural dominance despite Wednesday's bounce. The composite technical indicators read 40% Sell with soft strength and weakening direction, a significant deterioration from yesterday's 56% Sell, last week's 8% Sell, and last month's 16% Buy. Short-term composite is at 60% Sell, medium-term 25% Sell, and the long-term remains at Hold, painting a picture where the bounce has completely failed to shift the technical picture. News & Sentiment Analysis: The Iran conflict dominated Wednesday's session from the opening bell. US-Israeli military operations continued to escalate with CENTCOM confirming they have struck or sunk more than 20 Iranian naval vessels and hit over 2,000 targets across Iran. General Caine stated that CENTCOM has established localized air superiority across the southern flank of the Iranian coast and announced plans to expand operations inland. IDF fighter jets are actively carrying out strikes, with heavy airstrikes reported in Tabriz in northwest Iran and explosions heard in Tehran and the holy city of Qom. The IRGC warned that time is in Iran's favor and that they are prepared for a long war, while Iran's retaliatory strikes have reportedly declined in frequency. White House Press Secretary Leavitt laid out the US position clearly: the goal is to destroy Iran's ballistic missiles and bunkers, ground troops are not part of the plan, and Trump will determine victory once objectives are realized. The Senate began a procedural vote on a war powers resolution to end the Iran operation, adding a political dimension to the military conflict. Treasury Secretary Bessent made several notable comments during the morning session. On Iran, he stated that everything is going magnificently, the US will take out Iran's ballistic missiles and bunkers in coming days, crude markets are well supplied, and the US Navy will provide safe passage for tankers if needed. He compared the current situation favorably to the Ukraine invasion, noting the US is in a very different position regarding energy. On the tariff front, Bessent confirmed the 15% tariff rate is likely to enter force this week but added that rates will revert to previous levels in about five months, suggesting the administration views the escalation as temporary leverage rather than permanent policy. He also took aim at Spain for free-riding on NATO allies, which prompted diplomatic pushback from the EU Commission stating that a threat against any EU member is a threat to the whole EU. The EU reportedly expects to remain at the 10% tariff level despite Bessent's 15% headline, having received private assurances from the US. Fed commentary was headlined by a notably dovish Miran, who is now stepping down as Chair of the CEA to be replaced by Warsh. Miran delivered an extensive set of remarks calling for continued rate cuts at the March meeting, stating that one percentage point of cuts is appropriate this year, that he prefers to move in 25bps increments until reaching neutral, and that he sees monetary policy as still modestly restrictive. He pushed back against the notion that Iran should change the Fed's outlook, noting that evidence of oil prices feeding into core inflation is quite limited and that this situation is different from the Ukraine invasion in 2022 because monetary and fiscal policy were both more expansionary back then. Miran also flagged that if housing inflation decelerates as expected, the Fed could actually undershoot the 2% target. He noted a 2-year trend of labor market weakening that he sees as too early to reject based on recent data. Separately, Fed's Hammack called for being methodical on balance sheet shrinkage, and the SCOTUS released no opinions on the Fed's Cook case. Economic data was a tale of two PMIs on Wednesday. The ISM Services PMI blew past expectations at 56.1 versus 53.5 forecast and 53.8 prior, representing the strongest reading since mid-2022 and the 20th consecutive month of expansion. New Orders surged to 58.6 from 53.1, Employment improved to 51.8 from 50.3, and Business Activity jumped to 59.9 from 57.4. Critically, Prices Paid came in at 63 versus 68.3 expected, suggesting that despite robust activity, inflationary pressures in services are actually cooling. This is the closest thing to a goldilocks print the market could have hoped for. In contrast, the S&P Services PMI Final missed at 51.7 versus 52.3 forecast, and the Composite PMI similarly disappointed at 51.9 versus 52.3. The ADP Employment Change beat expectations at 63k versus 50k forecast and an upwardly revised 11k prior, but the absolute level remains anemic for a healthy labor market. MBA Mortgage Applications surged 11% versus 0.4% prior as the 30-Year rate held at 6.09%, suggesting some rate-sensitive demand is returning. The Fed's Beige Book released at 14:00 ET painted a cautiously optimistic picture. Overall economic activity increased at a slight to moderate pace in seven of the twelve Federal Reserve districts, though notably the number of districts reporting flat or declining activity increased from the prior period. Prices increased moderately with eight districts reporting moderate price growth and four seeing slight or modest increases. Wages rose at a modest or moderate pace. Most districts expected slight to moderate growth in the coming months. This moderate tone is consistent with Miran's view that the economy doesn't warrant the current level of policy restriction. AVGO's after-hours earnings were the standout corporate event. The company beat on every metric with EPS of $2.05 versus $2.03 expected and revenue of $19.31B versus $19.26B expected. The real headline was Q2 guidance of $22.0B versus the $20.53B consensus, a $1.5B beat that underscores the continued strength of AI semiconductor demand. AI semiconductor revenue is projected at $10.7B in Q2, and the company announced a $10B buyback program. This is the kind of guidance beat that should provide a tailwind for the AI infrastructure trade heading into Thursday, though how much of it gets offset by geopolitical risk remains the question. The energy picture is increasingly complex. EIA Crude Oil Inventories built 3.475M barrels versus the 3M forecast, with Cushing adding 1.564M. Gasoline drew 1.704M. But the real story is in the global energy market: Brent crude hit $82.14, the highest since July 2024, European natural gas soared another 21.98% to €54.29/MWh building on Monday's 39% spike, and US-Asia oil supertanker hire costs hit a new record of $29 million. Bloomberg reported that Iraq had started to shut down oil production that could halt 3 million barrels per day if the crisis persists. Despite Bessent's assurances that crude markets are well supplied and the US Navy will secure shipping lanes, the risk premium in energy markets continues to build. The Strait of Hormuz remains the key bottleneck, and the IRGC's warnings about it cannot be dismissed. Options and positioning data shows net dealer premium at roughly $226.33B with 0DTE premium at about $2.45B. The SPX Spot-Vol Beta reading of -2.45 indicates the VIX is significantly under-reacting relative to the price move, meaning options traders are not aggressively pricing in protection despite the market move and geopolitical backdrop. This kind of complacency in the vol space is worth noting, as it means a sudden spike in hedging demand could amplify any downside move. The Fear and Greed Index sits at 34, firmly in Fear territory and down significantly from 45 Neutral just one week ago and 47 one month ago. Institutional analysis from Credit Agricole shows their FX Risk Index surging to 1.0894 from 0.6546 last week, the highest level since the Liberation Day tariffs in April 2025, driven primarily by higher FX and equity market volatility. US money market fund assets surged to a record $8.271 trillion, with $49 billion flowing in during the week ended March 3 and $18.5 billion on Tuesday alone from the US-Israeli strikes, representing a meaningful flight to safety that rivals previous crisis episodes. Institutional analysis paints a cautious but nuanced picture. Deutsche Bank notes there's no sign of either side de-escalating, and if anything things are ratcheting up. However, they point out that despite everything, the S&P 500 is only within 2.5% of its peak and the STOXX 600 within 5%, meaning we haven't gotten to correction territory yet. MUFG reports Asian equities were hammered with the Kospi down 12% and Thai equities down 8%, while other markets fell 2-4% as investors price in a more substantial hit to growth. Goldman Sachs' data shows the US has heavily underperformed the rest of the world so far in 2026, with the S&P 500's relative return versus MSCI World ex-US currently in the bottom decile of the distribution going back to 1995. This rotation theme continues to pressure US large-cap allocations. On the tech side, Google committed to paying for 100% of the power its data centers use and bringing net-new energy to the grid, while also signing the White House Affordability Pledge. Meta confirmed data center power and water costs will not be passed to consumers. XAI is committed to developing a 1.2GW power plant as their supercomputer's primary power source. Apple announced the MacBook Neo priced at $599 with the A18 Pro chip, Intel's CFO warned that memory chip shortages will persist through 2027 with factories operating above 100% capacity, and the server CPU market is expected to grow meaningfully in 2026. Kraken became the first crypto firm to win access to the Fed's core payments system. The US Government shed 386,826 jobs in the first year of Trump's second term per government data, and the Warsh-for-Miran personnel change at the CEA signals a potential shift in economic advisory direction for the White House. Thursday's data calendar features Jobless Claims at 08:30 ET as the key release. Initial Claims are expected at 215k versus 212k prior, with Continued Claims at 1.8475M versus 1.833M prior. Also at 08:30: US Productivity Prelim expected at 1.8% versus 4.9% prior (a significant deceleration), Unit Labor Costs Prelim at 2% versus -1.9% prior (a big swing to positive), and Import Prices MoM at 0.3% versus 0.1% prior. The Unit Labor Costs number is worth watching closely because a strong print above 2% would complicate the dovish Fed narrative that Miran laid out. European data in the morning session includes Construction PMIs across the Eurozone and ECB speakers de Guindos (03:50), Rehn (04:35), and Nagel (05:00). Eurozone Retail Sales at 05:00 are expected at 1.7% YoY versus 1.3% prior. COST reports earnings after the close at 16:15 ET with expectations of $4.55 EPS and $69.24B revenue. AVGO's pre-market reaction will set the tone for tech and AI names. Forecast: • Overnight: AVGO's massive guidance beat ($22B vs $20.53B expected) should support ES in the Asia-Europe session, potentially pushing price back toward the 6,880-6,890 zone. However, Iran escalation headlines could cap upside and create choppy, headline-driven price action. European Construction PMIs and ECB speakers unlikely to be major catalysts • Morning Session: Pre-market focus on AVGO reaction and any overnight Iran developments. Jobless Claims at 08:30 along with Productivity and Unit Labor Costs provide the key data. In-line claims with hot Unit Labor Costs (above 2%) could pressure ES back toward 6,855-6,865. Soft data across the board could extend the rally toward 6,890-6,900 (MA confluence zone) • Afternoon: Direction likely established by the morning data reaction. If ES reclaims the 6,890-6,900 area, the afternoon could see a grind toward 6,920. If rejected at that zone, the afternoon drift likely targets 6,860-6,870. COST earnings anticipation may keep volume subdued into the close • Daily Close: Expecting a close in the 6,855-6,910 range depending on data and geopolitical developments. The path of least resistance remains lower given the structural bearish setup, but AVGO momentum and dovish Miran provide counterweights • Expected Range: 6,810 to 6,910 (based on 14-Day ADR of 95.55 points, widened for geopolitical volatility) • Most Likely Path: AVGO should attempt to lift the pre-market toward 6,875-6,890, testing the 5-DMA and 100-DMA/20-DMA confluence. However, the overnight fade from 6,900 to 6,862 shows sellers are already active. Jobless Claims and Unit Labor Costs at 08:30 determine whether the rally attempt gains traction or gets sold. Likely scenario is a grind up toward 6,880-6,890 that gets faded, with the afternoon drifting back toward 6,855-6,865 equilibrium. Iran headlines remain the wildcard that could swing the range 40-50 points in either direction Thursday Events: • 02:45: French Industrial Production MoM (0.4% forecast, -0.7% prior) • 03:00: Swiss Unemployment Rate Adjusted (2.9% forecast, 2.9% prior) • 03:30: French Construction PMI (43.5 prior), Eurozone Construction PMI (45.3 prior), German Construction PMI (44.7 prior) • 03:50: ECB's de Guindos Speaks • 04:30: UK Construction PMI (47 forecast, 46.4 prior) • 04:35: ECB's Rehn Speaks • 05:00: Eurozone Retail Sales YoY (1.7% forecast, 1.3% prior), Eurozone Retail Sales MoM (0.3% forecast, -0.5% prior) • 05:00: ECB's Nagel Speaks • 08:30: US Initial Jobless Claims (215k forecast, 212k prior) • 08:30: US Continued Jobless Claims (1.8475M forecast, 1.833M prior) • 08:30: US Productivity Prelim (1.8% forecast, 4.9% prior) • 08:30: US Unit Labor Costs Prelim (2% forecast, -1.9% prior) • 08:30: Import Prices MoM (0.3% forecast, 0.1% prior) • 16:15: COST earnings (EPS $4.55, Rev $69.24B) • Ongoing: Iran military operations, AVGO post-earnings reaction, 15% tariff implementation watch Resistance: • 6,930-6,935 - 50-DMA (6,933.83). Major overhead resistance and the first level that would signal a meaningful technical improvement. Price has been consistently rejected below this zone for the past week. Only in play on a combination of hot AVGO rally and soft economic data • 6,920-6,925 - Computed first resistance (6,922.17) / 3-standard deviation band (6,922.69). This was Wednesday's approximate high area and represents the ceiling the bulls need to break. 38.2% Fib retracement from 13-week high sits at 6,919 adding confluence • 6,890-6,900 - 100-DMA (6,890.91) / 20-DMA (6,895.25) / 1-SD resistance (6,902.96) confluence. The most important zone for Thursday. These moving averages have converged with the statistical expected range ceiling. The Globex session already tested and rejected this area at 6,900.75, confirming sellers are defending aggressively • 6,876-6,880 - Wednesday settlement (6,876) / 50% Fib retracement from 13-week range (6,880.88). Key resistance now that price has pulled back below it. A reclaim would suggest the overnight fade was just noise • 6,865-6,868 - 5-DMA (6,866.95) / 50% Fib from 4-week range (6,865.13). Immediate overhead. Price is trading right around this area, making it the first level bulls need to reclaim Support: • 6,850-6,855 - Thursday Globex low (6,850.25) / Stochastic 50% level (6,855.75) / 1-SD support (6,849.04). Immediate support and the overnight low. This area lines up with the computed pivot point (6,847.83), creating a dense support cluster. A clean break below here changes the complexion from consolidation to distribution • 6,838-6,843 - 38.2% Fib from 13-week low (6,842.61) / 2-SD support (6,837.88). A secondary demand zone below the pivot. If the first support breaks, this is where the next wave of buying should emerge • 6,800-6,810 - Computed first support (6,801.67) / Stochastic 30% level (6,800.95) / psychological round number. A significant demand zone representing a full retracement of Wednesday's bounce. Institutional buyers likely step in here • 6,775-6,785 - Wednesday pre-market low / Stochastic 20% level (6,773.55). This is where the Iran-driven selloff found a bottom before the ISM Services reversal. A break below signals the entire recovery has been negated • 6,718-6,727 - Monday's weekly low / computed second support (6,727.33) / 1-month and 13-week low (6,718.75). The critical level for the entire week. A break below confirms a new leg lower in the correction How I'm seeing it: • Leaning bearish for Thursday, and the overnight fade from 6,900 to 6,862 reinforces this view. The geopolitical risk from Iran is the dominant factor, and the market tested the 100-DMA/20-DMA confluence and got immediately rejected. Wednesday's bounce was impressive but it was driven by a single data point (ISM Services) and the broader technical structure remains bearish with -DI dominant, composite indicators at 40% Sell weakening further (from 56% Sell yesterday), and price now below ALL moving averages including the 5-DMA (6,866.95) • AVGO's $22B Q2 guidance beat is substantial and should support the AI trade in the pre-market. However, the broader Magnificent Seven has been under pressure with Goldman Sachs data showing the US in the bottom decile of relative performance versus MSCI World ex-US. Individual earnings beats may not be enough to lift the entire index when rotation is working against US large-caps • The 6,890-6,900 zone (100-DMA/20-DMA confluence) is the key battleground for Thursday. A reclaim above 6,900 on strong volume would flip the short-term picture bullish and target the 50-DMA at 6,934. A rejection sets up a retest of 6,860-6,865 and potentially Wednesday's pre-market low at 6,782 • Unit Labor Costs at 08:30 is the underappreciated risk. The forecast of 2% versus -1.9% prior is a massive swing, and any upside surprise above 2.5% would directly contradict Miran's dovish narrative and could trigger a sharp selloff. Conversely, a soft print would reinforce the rate cut case • The Spot-Vol Beta at -2.45 showing VIX under-reacting is a warning signal. If the fear response catches up to the actual price action and geopolitical risk, we could see an abrupt VIX spike that amplifies any downside move. The record $8.27 trillion in money market funds and Credit Agricole's FX Risk Index at the highest since Liberation Day both confirm institutional risk aversion is elevated even if the VIX isn't fully reflecting it yet • Primary Setup: Short from 6,885-6,895, stop 6,920, targeting 6,840 first then 6,800 (computed first support). Fading any AVGO-driven push into the 100-DMA/20-DMA resistance confluence, which already rejected price at 6,900.75 in the overnight session. Bearish technical structure, geopolitical headwinds, overnight fade confirmation, and potential Unit Labor Costs catalyst all support the short thesis The weekly structure is shaping up as a battle between fundamental catalysts and geopolitical risk. ISM Services and AVGO point higher, but the Iran conflict, 15% tariff implementation, record flight to safety, and institutional risk aversion all argue for continued caution. Wednesday's reversal from 6,782 to 6,876 showed the market can rally on good data, but the overnight fade from 6,900 back to 6,862 confirms the key moving averages are acting as a ceiling and sellers remain in control. The Iran diplomatic signal (NYT) is the one wildcard that could shift sentiment, but until the US actually responds, it's just a headline. COST earnings after the close could provide the next directional catalyst for Friday. Good Luck !!!