Stocks Pushing Higher

US stocks are on watch today with the S&P futures breaking out to fresh record highs earlier in the session before cooling slightly, though still in the green for the day. Despite news of fresh US military strikes against Iran overnight, it seems that optimism around a potential US/Iran trade deal is keeping stock sentiment bullish on Tuesday. The broader view seems to be that despite any near-term hiccups, a deal will ultimately be delivered putting an end to the conflict and allowing for the re-opening of the Strait of Hormuz.

Bullish Outlook

With this in mind, equities should remain a buy on dips near-term with the focus on a continuation higher. Any positive headlines this week, such as reassurance from Trump and/or Iran over the ceasefire and a recommitment to negotiations should help propel stocks further higher. However, if tensions continue to rise and we see escalating attacks from both sides, this could dent near-term confidence in the peace process, leading stocks lower near-term as traders move back into safe-haven positions, particularly USD which has been rising again today.

US Data On Watch

Stocks have also been boosted by upbeat earnings report and strong performance in AI stocks again which have also helped boost sentiment. Looking ahead this week, traders will also be watching incoming US data with consumer confidence data due later today followed by PCE data and GDP readings due on Thursday alongside durable goods and weekly jobless claims. Hawkish Fed expectations so far seemingly unphased stock bulls and any data upside this week cold simply help lift stock sentiment further.

Technical Views

ES (S&P Futures)

The recent correction lower has found fresh demand with price now testing above the 7,537.75 highs. For now, the focus is on a continuation higher within the bull channel. However, we are seeing bearish divergence which suggests risks of a near term drop. 7,362 remains the key support to watch if we do turn lower from here.