ES (SPX, SPY) Analysis, Key Levels, Setup for Fri (Jan 16)E-mini S&P 500 FuturesCME_MINI:ES1!MyAlgoIndex The S&P 500 futures market is signaling renewed optimism heading into Friday's session, buoyed by a powerful earnings report from Taiwan Semiconductor Manufacturing Co. and resilient labor market data that together have eased concerns about the durability of the artificial intelligence trade. E-mini S&P 500 futures extended gains for a second consecutive session, settling Thursday near 6994, advancing 12.25 points, or 0.18%, from the prior close of 6981.75. The catalyst proved to be TSMC's fourth-quarter results, which showed profit growth of 35% and a commitment to capital expenditures of $52 billion to $56 billion in 2026. The guidance dispelled fears that hyperscaler spending on AI infrastructure might be cooling, sending Nvidia Corp. shares up more than 2% and lifting the broader semiconductor complex. "Taiwan Semi's results today, and more importantly, their capex spending plans, point to reassuring investors that the AI trade is not necessarily a bubble at this point," said Kim Forrest, chief investment officer at Bokeh Capital Partners. The CBOE Volatility Index fell 5.43% to 15.84, its lowest level in weeks, suggesting options traders see diminished risk of near-term turbulence. Trade Developments Add Tailwind Taiwan's Vice Premier confirmed that a bilateral tariff agreement with the United States would be signed within several weeks. The arrangement includes $250 billion in company-led investment alongside $250 billion in credit guarantees a framework the official described as distinct from recent deals struck with Japan and South Korea. The development carries implications for semiconductor supply chains that remain central to U.S. economic competitiveness. Taiwan emphasized that domestic investment would continue even as companies expand their American footprint, a signal that TSMC's Arizona operations will complement rather than replace its home-island capacity. Bank earnings provided additional support. Goldman Sachs Group Inc. and Morgan Stanley both exceeded analyst expectations, capitalizing on a resurgence in dealmaking activity. BlackRock Inc. reported record assets under management of $14 trillion. Labor market data reinforced the constructive tone. Initial jobless claims for the week ending January 10 totaled 198,000, well below the 215,000 economists had forecast—evidence that employment conditions remain firm despite elevated interest rates. Technical Picture Favors Continuation From a structural perspective, the daily chart maintains a pattern of higher highs and higher lows, with price holding above a significant volume concentration between 6880 and 6900. Fibonacci extensions derived from the recent swing project potential upside targets at 7149.75, 7226.75, and 7311.75. The four-hour timeframe shows consolidation between a premium zone near 7025-7050 and equilibrium around 6900. A higher low established at 6923 earlier this week suggests buyers remain willing to defend pullbacks. On the one-hour chart, a series of bullish momentum signals have confirmed the near-term uptrend. The 6900-6910 zone, representing the prior week's low, now serves as structural support. Overhead, resistance near 7050, where distribution activity would be expected. Treasury yields present a modest headwind, with the 10-year note at 4.17% as of Thursday's close. Key Levels Resistance 7050 → Premium zone, Weak High 39% 7017.25 → PDH (primary target) 7000 → Psychological, PWH area Pivot 6992.25 → VWAP 6981.75 → Prior Close Support 6974.75 → PDL (range edge) 6949.50 → ONL 6920-6925 → 1H HL structure 6900-6910 → PWL, critical support 6860 → Strong Low 61%, 1.272 Fib extension Primary Setup: Long ES at PDL Support Bias: Bullish above 6992.25 VWAP Entry Zone: 6974 - 6978 (PDL range edge) Stop Loss: 6964 (below PDL structure) Target 1: 6992.25 (VWAP) → Scale 50% Target 2: 7017.25 (PDH) → Runner at breakeven Risk: 10-14 points Confirmation Checklist - CVD divergence at 6974-6978 (selling exhaustion) - Bid wall formation / absorption - Hold above 6970 on retest - Volume decline into the pullback Alternative Setups Long Breakout Entry: Above 7020 (with retest) Target: 7040-7050 Stop: Below 7010 Short at Premium Entry: 7040-7050 (rejection only) Target: 7020 / 7000 Stop: Above 7060 Long Deep Pullback Entry: 6920-6925 (1H HL) Target: 6975 / 7000 Stop: Below 6910 Economic Calendar - Friday Jan 16 8:30 AM ET → Business Leaders Survey (Low) 9:15 AM ET → Industrial Production & Capacity Utilization ⚠️ (High) 11:45 AM ET → NY Fed Staff Nowcast (Low) Industrial Production is the main event. A beat confirms manufacturing strength and supports continuation toward 7017.25+. A miss could offer pullback opportunity toward structural support.