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US futures rebound alongside global markets, but holiday uncertainty keeps sentiment on edge.
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Trade optimism from Japan talks and ECB decisions drive cautious buying across risk assets.
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S&P 500 shows signs of bottoming, but resistance near 5510 limits short-term bullish conviction.
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Following yesterday’s drop, US index futures have bounced back along with European and Asian indices. Now, it remains to be seen whether the gains can hold heading into the easter long weekend holiday for most western markets.
Following the big rally last week, the US markets have struggled so far this week, with all three major indices being lower on the week despite European markets holding in the positive territory. That suggests that investors are still largely avoiding US markets, with European stocks gaining a bit of a haven status. Still, Wall Street could extend last week’s recovery should more progress be made on the trade situation, especially with China.
Today’s tech-fuelled recovery is driven by Trump declaring “big progress” is being made in talks with Japanese officials, while Taiwan Semiconductor surprisingly kept its 2025 growth forecast steady. All eyes will be on Netflix (NASDAQ:NFLX) earnings after the close.
What Is Driving Market Sentiment Today?
There’s been a flurry of activity across global markets, much of it driven by a mix of geopolitical manoeuvring and central bank posturing. US President Donald Trump claimed “big progress” in talks with Japanese officials, calming fears of a tariff-related clash and giving the Nikkei 225 a decent 1.5% boost.
Meanwhile, Wall Street appears poised to recover some poise after a Powell-induced wobble on Wednesday. The Fed chair, taking a notably cautious tone, all but shelved hopes of swift intervention, insisting on a wait-and-see approach when it comes to tariffs and inflationary pressures. Let’s see what Christina Lagarde and her ECB colleagues will have to say, with the central bank looking poised to cut rates today for the seventh time.
Netflix Earnings in Focus
On the corporate earnings front, eyes are on Blackstone (NYSE:BX), American Express (NYSE:AXP), and Schwab (NYSE:SCHW) before the bell, with Netflix rounding off the day’s action after the close.
With tariffs and trade war concerns battering the other big tech names, Netflix has weathered the storm with the stock up around 8% year to date. Investors feel that tariffs have little bearing on Netflix, while a growing advertising arm is beginning to prove a genuine engine of revenue. Analysts point to its sticky subscriber base as another advantage, bolstered by strong content and strategic pricing.
S&P 500 Technical Analysis
Turning our attention to the charts now, markets are continuing to trade sideways on Wall Street, with both the bulls and bears influencing market direction. So, unlike before, it is no longer a one-way street where only the bulls have all the success. This makes for a great short-term trading environment. But there are tentative signs to suggest markets may have already bottomed out, most notably when observing the weekly chart.
As a reminder, last week saw a massive bounce in the S&P 500, with the index closing up nearly 5.9%, after recovering from early weakness. It also clawed back much of the 9% drop from the week before. Support came in right where it needed to: at the convergence of the long-term bullish trend line that goes back to the COVID pandemic lows with prior long-term resistance around the 4800-4840 area.
This is the most important long-term support area to have on your charts for future references in case we see fresh selling emerge in the coming weeks, or the current week’s selling gathers pace.
Meanwhile, staying with the weekly time frame, there is one additional key support area to watch now that the abovementioned long-term support area has held. The area shaded on the grey chart between 5047 to 5120 was formerly support that gave way during the tariff-related market meltdown, before being reclaimed.
If last week’s big piecing candle marked a reversal, then this area, should we dip down to it, should, in theory, hold as support. In practice, things may not work out so perfectly, so take nothing for granted.
On the upside, we can see that resistance around the 5510 area has held on the first test from below. This was the last low prior to the big breakdown a couple of weeks ago. Once support, it has turned into resistance.
The bulls will want to see the index eventually go back above this level in order to tip the balance back in their favour. Until that happens, any short-term bullish price action we may observe on the lower time frames should be taken with a pinch of salt.
S&P 500 Levels to Watch on Daily Chart
Some of those key long-term levels mentioned above are also displayed on the daily chart of the S&P 500 futures. Additionally, there are some key short-term levels to watch in order to better guide your trading decisions.
Among them is the shaded blue area between 5251 and 5286. This area held as support following yesterday’s dip. It will need to continue holding, otherwise we could see a dip towards the longer-term support levels highlighted on the weekly chart.
In terms of resistance levels on the daily time frame, the 5394 level is now the first hurdle to watch. Previously, support back in September, this level momentarily turned into support on Monday after last week’s rally, before giving way during Wednesday’s latest meltdown.
Above that, you have the 21-day exponential average followed by the more significant resistance zone between 5532 to 5600, where prior support meets the short-term bearish trend line that was established since markets topped out in February.
How to Trade in This Current Macro Environment?
My view is that we should concentrate on level-to-level trading and not worry about where the market is heading in the longer-term outlook. All this volatility will provide lots of tradable bounces in both directions. Try to stay as neutral as possible in terms of directional bias. That way, it will be easier to flip your positions when markets turn around.
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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.