US500 Trading Update
US500 Trading Update
***QUOTING ES1! FOR CASH US500 EQUIVALENT LEVELS, SUBTRACT POINT DIFFERENCE***
WEEKLY BULL BEAR ZONE 6510/20
WEEKLY RANGE RES 6748 SUP 6369
April OPEX Straddle: 328.55pt range implies a OPEX to OPEX range of [6177, 6835]
June QOPEX Straddle is 546.4pt giving us a range of [5960,7052]
DEC2025 OPEX to DEC2026 OPEX is 945 points giving us a range of [5889,7779]
DAILY VWAP BEARISH 6691
WEEKLY VWAP BEARISH 6777
MONTHLY VWAP BEARISH 6869
DAILY STRUCTURE – OTFD - 6643
WEEKLY STRUCTURE – OTFD - 6808
MONTHLY STRUCTURE - OTFD
Balance: This refers to a market condition where prices move within a defined range, reflecting uncertainty as participants await further market-generated information. Our approach to balance includes favouring fade trades at the range extremes (highs/lows) while preparing for potential breakout scenarios if the balance shifts.
One-Time Framing Higher (OTFH): This represents a market trend where each successive bar forms a higher low, signalling a strong and consistent upward movement.
One-Time Framing Lower (OTFD): This describ@es a market trend where each successive bar forms a lower high, indicating a pronounced and steady downward movement.
DAILY BULL BEAR ZONE 6667/54
GAMMA FLIP 6850
DAILY RANGE RES 6629 SUP 6499
2 SIGMA RES 6695 SUP 6429
VIX BULL BEAR ZONE 22
PUT/CALL RATIO 1.26 (The numbers reflect options traded during the current session. A put-call ratio below 0.7 is generally considered bullish, and a put-call ratio above 1.0 is generally considered bearish)
TRADES & TARGETS
(I FADE TESTS OF 2 SIGMA LEVELS ESPECIALLY INTO THE FINAL HOUR OF THE NY CASH SESSION AS 90% OF THE TIME WHEN TESTED THE MARKET WILL CLOSE ABOVE OR BELOW THESE LEVELS)
GOLDMAN SACHS TRADING DESK VIEW - Week Ahead’
Main Events for the Week Ahead:
March 23rd: ECB speakers Cipollone and Lane, ECB wage tracker, EUR supply, Japan CPI, construction spending.
March 24th: European PMI, ECB speakers Kocher, Sleijpen, Cipollone, and Lane, EUR supply, US PMI (flash), 2-year auction.
March 25th: ECB speakers Lagarde, Lane, Rehn, Kocher, and Elderson; BoE speaker Greene; EUR supply, UK CPI, US 5-year auction.
March 26th: German consumer confidence, Spain GDP, ECB speakers Guidones and Muller, BoE speakers Breeden, Taylor, and Greene, UK supply, Initial Jobless Claims (IJC), 7-year auction, Fed speaker Jefferson.
March 27th: UK retail sales, Spain CPI, ECB CPI expectations, ECB speaker Schnabel, EUR supply, University of Michigan sentiment (UMich), Fed speakers Daly and Paulson.
Market Overview and Volatility Insights:
Last week, fixed income markets experienced another major Value-at-Risk (VaR) shock. While ECB President Christine Lagarde initially maintained a reassuring tone during the March policy meeting, subsequent hawkish remarks from the Federal Reserve and the Bank of England reignited market volatility. The narrative shifted further after the ECB meeting, driven by Bundesbank President Joachim Nagel’s pointedly hawkish comments. Nagel emphasized the need for vigilance and hinted at a potential rate hike in April if the Eurozone’s inflation outlook worsens. His use of "vigilant" harkened back to the era of former ECB President Jean-Claude Trichet, who famously signaled imminent hikes using similar phrasing.
Volatility Dynamics and Market Positioning:
The options market saw a notable spike in EUR 3m1y swaption volatility, an unusual occurrence as the underlying market rallied. This "vol-bid-on-rally" phenomenon suggests crowded trades being unwound, highlighting that market positioning remains far from clean. Attempts to "buy the dip" in duration have repeatedly been stopped out, with persistent pressure on the front end of the curve.
Historical Comparison: The 2011 Policy Error:
The current environment bears similarities to 2011, when Trichet raised rates in April and July amidst a sharp rise in energy prices. During that time, Brent crude surged from $90 per barrel in late 2010 to over $120 by April 2011, driven by geopolitical tensions from the Arab Spring and the Libyan Civil War. These rate hikes led to severe consequences:
- Equities: The Euro Stoxx 50 fell by approximately 33% over six months.
- Yields: German 10-year Bund yields dropped from 3.5% to 1.67%, as markets shifted focus from inflation fears to recession concerns.
Strategic Outlook and Risks:
The market is currently influenced by elevated oil prices due to Middle Eastern tensions and the closure of the Strait of Hormuz. If the ECB proceeds with an April rate hike—exactly 15 years after the 2011 policy mistake—the risk of a similar outcome looms large. A shift from an "inflation narrative" to a "growth-scare" narrative could lead to a sharp equity sell-off and a flight-to-quality rally in Bunds.
Systematic Flows as a Headwind:
Systematic flows continue to weigh on the market. CTA models are signaling "sell" across nearly all scenarios and tenors of the curve, suggesting that momentum-driven selling may further amplify any fundamental weaknesses
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% and 73% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!