Strike zone
Republicans made consumer wallets their centerpiece issue for the midterms, but the Iranian conflict just threw a wrench in their plans.
Gas was sitting pretty under $3 a gallon before the conflict kicked off. Now? Americans are staring at prices north of $4 at the pump.
Sure, fuel only eats up 5% of household budgets today (down from 10% in the ’80s), but that’s enough to dent consumer confidence.
Bank of America’s data shows spending on debit and credit cards (excluding gas) has cooled since Operation Epic Fury began. Lower-income households are cutting back hardest on the fun stuff: entertainment, travel, dining out.
And we’re just getting started. If Brent crude stays above $100, real U.S. GDP could drop by a full percentage point.
Trump knows slower growth hurts his approval ratings. That might push him toward a quick resolution with Iran, even if it means the U.S. doesn’t get everything it wants.
The retrospective
Buyers couldn’t push past the weekly pivot point early in the session [1][3], so short sellers took charge.
The selling pressure drove prices through the VWAP [2] and the psychological 45,500 level [4], with the market closing near its lows [5]. Overnight trading saw a second dip below the intraday support at 45,306 before prices bounced back.
Today's trading plan
Short sellers still run the show, but they’ve taken some profits at the monthly S4 support level.
Despite the sharp drop, sellers remain cautious while buyers stay oddly optimistic. That suggests more downside ahead.
I’m sticking with short trades but taking quick profits at key intraday levels. I’ll wait for buyers to get properly trapped on this bounce (possibly at today’s open above the weekly pivot) before getting more aggressive.
Happy trading!
Maxime holds two master’s degrees from the SKEMA Business School and FFBC. As founder and editor-in-chief of NewTrading.fr, he writes daily about financial trading.
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