Market Update: ES Struggles at 5600 as FOMC Takes Center Stage
The S&P 500 (ES) was barely able to defend 5600, and this level is now the key battleground ahead of tomorrow’s FOMC decision. The market is hesitating, caught between rising economic uncertainty and expectations for Fed action.
The CNBC Fed Survey has now increased the probability of a U.S. recession to 36%, up from 23% in January.
VIX has climbed back toward 23, signaling growing fear but still not at panic levels.
Tech (QQQ) remains under pressure, with NQ failing to sustain bounces.
Chinese (KWEB) and European markets (EWG) are showing strength, raising questions about capital rotation.
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FOMC Decision: Will the Fed Act, or Will the Market Panic?
🔹 If the Fed Cuts Rates – Market Relief or Panic?
A rate cut should, in theory, be bullish as it preempts a slowdown. But the market could also interpret it as a sign the Fed sees deeper problems ahead, triggering a negative reaction.
🔹 If the Fed Holds Steady – Will the Market Sell Off?
A no-cut decision may signal that the Fed is behind the curve, failing to react to rising unemployment risks, tariffs, and economic slowdown fears. Given that ES has already struggled at key levels, this could accelerate selling pressure.
Repatriation of Capital? A Silent Rotation to Other Markets
One interesting development is that while U.S. markets are struggling, China and Europe are seeing momentum.
Chinese stocks like BABA, BIDU, and FUTU are gaining traction.
Germany’s stock exchange and other European indices are also moving higher.
This raises questions about whether global investors are starting to shift capital away from U.S. equities into undervalued markets abroad.
Is this a sign that investors see bigger risks in the U.S. economy compared to other regions? Or is it simply a short-term rotation before FOMC clarifies the market’s direction?
Key Market Levels to Watch Post-FOMC
ES (S&P 500 Futures) – The Battle at 5600 Continues
Resistance: 5660 – If reclaimed, a bounce could happen.
Support: 5550 – If lost, expect another wave of selling.
NQ (Nasdaq Futures) – Tech Weakness vs. China Strength
Resistance: 19,800 – Bulls need this breakout.
Support: 19,400 – A breakdown would confirm a bearish trend.
VIX (Volatility Index) – Market Nervous Ahead of FOMC
Currently at 23 – rising, but not signaling a full-blown crisis yet.
If it pushes toward 25+, expect more aggressive selling pressure.
Final Thoughts: Stay Cautious Before FOMC
U.S. markets are weak, struggling to hold key support.
Rising recession fears and economic uncertainty could force the Fed’s hand.
FOMC will dictate whether we see stabilization or another leg lower.
Capital flows into China and Europe suggest growing concerns over U.S. economic resilience.
Right now, the best move is to stay cautious and watch how the market reacts post-FOMC. Will the Fed’s decision reinforce the current weakness, or can they restore confidence?
Disclaimer:
The information provided in this article is for educational purposes only and should not be considered financial advice. Trading and investing in financial markets involve substantial risk and are not suitable for all investors. Please consult with a qualified financial advisor before making any investment decisions.
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