Morning Market Analysis - 14 May 2025

Market Overview and Sentiment News

U.S. equity futures held near breakeven in premarket trading Wednesday after stocks extended a rally fueled by softer-than-expected April CPI (+0.2% MoM) and a 90-day U.S.-China tariff truce that spurred optimism about trade and growth. S&P 500 futures were flat, Nasdaq-100 futures added around 0.2%, and Dow futures were little changed. Premarket gains in AI chip leaders Nvidia (+1.6%) and Tesla (+1.8%) reflected enthusiasm for a landmark Nvidia-Saudi Arabia AI deal, while consumer discretionary names such as American Eagle fell over 13% on withdrawn guidance. The dollar weakened to near 103.4 amid Fed reluctance to signal imminent rate cuts before assessing tariff impacts. Oil traded around $63.30 per barrel on supply concerns ahead of the EIA inventory report, and gold held near $3,220 amid mixed safe-haven demand. Investors are watching today’s PPI report at 8:30 a.m. ET and Fed speakers for further cues, while China’s recent flash PMI and Asia-Pacific futures gains underpin a cautious bullish tone for U.S. contracts. Earlier this week, U.S. stocks rose on a U.S.-UK trade agreement and a Fed hold that buoyed semiconductors late in the session, and investors have welcomed conciliatory U.S.-China talks over the weekend. European markets eye potential new trade deals and major AI chip developments as further drivers of sentiment.

Technical Analysis Insight

Prices as of 14 May 0500EST

• ES (E-mini S&P 500 futures): Trading near 5,900, RSI ~46.3, MACD slightly negative; price slipped below the 8‑EMA (~5,908) and 21‑EMA (~5,906) as it tested the lower Bollinger Band around 5,890, trading below today’s VWAP (~5,912). Short‑term support sits at the BB lower (≈ 5,890) and a pivot near 5,880; a rebound above the 8‑EMA would target 5,915, while a breakdown below 5,880 could open 5,850.
• NQ (E-mini NASDAQ 100 futures): Trading near 21,100, RSI ~36.0, MACD below signal with negative histogram; price is riding the lower BB and remains under the 8‑EMA (~21,135), 21‑EMA (~21,160), and VWAP (~21,185). Watch for support at 21,080 and resistance at 21,170; a bounce above the 8‑EMA would confirm short‑term stabilization.
• YM (E-mini Dow futures): Trading near 42,270, RSI ~54.6, MACD marginally negative; price consolidating between the 8‑EMA (~42,285) and 21‑EMA (~42,270), just below VWAP (~42,295) and around the BB mid‑band. Key intraday levels are 42,220 support and 42,330 resistance; a move above VWAP aligns with broader bullish momentum.
• RTY (E-mini Russell 2000 futures): Trading near 2,100, RSI ~46.9, MACD flattening near the zero line; price hovering around the BB mid‑band, beneath the 8‑EMA (~2,104), 21‑EMA (~2,102), and VWAP (~2,103). Support lies at 2,095 and resistance at 2,110; look for a break above the 8‑EMA to signal intra‑day bullish resumption.

Technical Summary: Across ES, NQ, YM, and RTY, short‑term momentum has cooled after recent rallies, with prices pulling back toward lower Bollinger Bands and moving averages. However, on the 4‑hour charts all four contracts remain above their 8‑ and 21‑period EMAs, with RSI readings between ~62 and ~72 and positive MACD trends, indicating the medium‑term uptrends are intact. Today’s pullbacks offer potential re‑entry opportunities on bounces to EMAs or VWAP; traders should watch for recovery above the 8‑EMA as confirmation of resumed bullish sentiment, while a breach of short‑term support levels could signal deeper consolidation.

Foundational Analysis

As of this morning’s open, key economic data and corporate developments set the backdrop for equity futures:

• Macro Data: April headline CPI rose 0.2% MoM (below consensus) with core CPI +0.3%, easing inflation pressures. April retail sales surprised with a 0.4% MoM gain, reflecting resilient consumer spending. Today’s PPI print and Fed minutes will be critical for input-cost and policy outlooks.
• Growth Indicators: Q1 GDP expanded at a 2.1% annualized pace, while the ISM Services PMI climbed to 55.2, underscoring robust service‑sector activity.
• Corporate Earnings: Q1 earnings season remains strong—roughly 70% of S&P 500 companies have beaten EPS estimates and 65% topped revenue forecasts. Mega‑cap tech names like Nvidia and Apple delivered upside, despite cautious margin commentary.
• Financial Conditions: 10‑yr Treasury yields held near 4.5% after dovish Fed minutes language, supporting bank and cyclical sectors. Credit spreads have narrowed modestly, improving overall risk sentiment.
• Global Sentiment: China’s Caixin Services PMI rose to 52.8 in April, and Europe’s preliminary PMI readings held above 50, bolstering a constructive backdrop for U.S. equity futures.

Together, easing inflation, resilient spending, and solid corporate results underpin a cautiously optimistic outlook for ES, NQ, YM, and RTY futures, though today’s PPI and Fed minutes may trigger short‑term volatility.

Upcoming Economic and Trading Events

• Wednesday, May 14 — U.S. Producer Price Index (PPI) (Apr MoM): Expected +0.1% MoM; a cooler-than-forecast print supports futures by signaling easing wholesale inflation (bullish), while a hotter print may spook markets and tilt bearish.
• Wednesday, May 14 — FOMC Minutes (Apr meeting): Dovish tone could lift futures (bullish); hawkish language or emphasis on tightening may pressure equity futures (bearish).
• Thursday, May 15 — U.S. Retail Sales (Apr MoM): Consensus +0.4% MoM; stronger spending supports consumer-driven sectors and lifts futures (bullish), while a miss may weigh on cyclicals (bearish).
• Thursday, May 15 — U.S. Initial Jobless Claims: Forecast ~230K claims; lower-than-expected claims signal labor-market strength (bullish for risk assets), while a surge in layoffs can boost safe havens (bearish).
• Thursday, May 15 — University of Michigan Consumer Sentiment (May prelim): Expected ~69; a beat indicates resilient consumer confidence (bullish), while a decline below forecast suggests caution (bearish).
• Friday, May 16 — U.S. Housing Starts & Building Permits (Apr): Starts > 1.40M/permits > 1.48M signal housing sector strength (bullish), while data below expectations may be bearish for growth-sensitive sectors.
• Friday, May 16 — U.S. Industrial Production & Capacity Utilization (Apr): Production forecast +0.3% MoM; a beat supports cyclical sectors (bullish), while a contraction could weigh on materials and industrials (bearish).

Traders should watch these high-impact releases for volatility spikes and directional cues in ES, NQ, YM, and RTY futures through the rest of the week.

Key Takeaways

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Overall Daily Strategy:

• Begin by observing early price action around key intraday EMAs and VWAP—seek long entries on bounces above the 8-EMA in ES and NQ, with tight stops below the lower Bollinger Band support levels.
• Monitor the U.S. PPI release and FOMC minutes for volatility spikes; consider scaling back position size 15 minutes before these releases and re-entering on confirmed directional breakouts.
• Lean into consumer and cyclical sectors ahead of Thursday’s retail sales and jobless claims if PPI data remains benign; shift toward defensive names if inflation surprises to the upside.
• Keep risk per trade limited to 0.5–1% of trading capital, using support/resistance pivots and VWAP confluence for stop placement.
• Adjust trade bias dynamically—if ES, NQ, and YM reclaim their 8-EMA after pullbacks, maintain bullish tilt; if they break below major supports (e.g., ES 5,880, NQ 21,080), switch to short setups targeting the next demand zones.