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The new Sheriff loves tariffs, the markets not so much
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Our View
What was then is clearly not now… welcome to the world of the Trump bump and dump. While no one should be surprised by Trump’s tariff actions, the unpredictability of this administration is something we should all start getting used to.
I had an IV and an MRI, so I got to my computer late on Friday—but not late enough to avoid the bloodshed. In fact, I bought at 6141.50s and added at 6138s, then sold at 6140s. While I didn’t lose a lot of money, I tried several times—30, 40, 50 points off the high—and they all lost. The night of Trump’s election win, I said volatility was going to increase sharply, and I think this is just the beginning of a long four years of surprises.
All week, the administration talked about Saturday being D-Day for tariffs, but then they dropped a bomb two hours before the close on Friday. I have never heard how trade wars are good for the stock market—have you? China said it’s going to retaliate… what if they started unloading U.S. Treasuries? As of November 2024, China held $768.6 billion in U.S. Treasury securities, making it the second-largest foreign holder of U.S. debt after Japan. If there was ever a time for China to hit back, this would be it.
I had a feeling things were going to be bad Sunday after Canada responded with retaliatory tariffs, Mexico said it would explore levies on U.S. imports, and China announced it would file a lawsuit with the World Trade Organization.
On the Sunday open ES made a low at 5935.50 down 212.25 (-3.45%) from Friday’s high—and Bitcoin was at 914550 down 15490 (-14.48%). The YM fell 1.2%, the ES dropped 1.7%, and the NQ plunged 2.3%. The only thing I can say is how unstable everything feels, and how bad Robert F. Kennedy Jr.’s confirmation hearing is going. There are so many moving parts, it’s almost like we’re waiting for the next tape bomb to go off. Trump’s tariffs have changed the complexion of the markets—but for how long? Next week is stacked with 16 economic releases, 11 Fed speakers, and a slew of earnings.
Our Lean
This stuff is scary, but I think the market has dropped too much, too fast. I’m not saying it can’t go lower, but barring another major headline, I think there’s a chance we see the ES back in the 6000s or higher.
Our Lean: I have to stick with my rule: After a big drop, the ES tends to go sideways to higher. 6044 to 6060.
MiM and Daily Recap
The S&P 500 E-mini futures (ES) experienced a strong early rally before reversing sharply lower into the close, marking a volatile trading session.
The market opened with a dip before finding support around 6115.00. From there, it pushed higher, reaching 6139.75 before encountering resistance. A pullback to 6132.75 was met with renewed buying interest, propelling the ES to a session high of 6147.75 just before noon. This would prove to be the peak of the day, as selling pressure emerged, triggering a steady decline.
By early afternoon, the ES had fallen sharply to 6127.75 before attempting a minor recovery. However, it struggled to regain upward momentum and soon reversed lower. Selling accelerated, driving the market down to 6057.75. A brief recovery attempt pushed it back to 6080.25, but sellers quickly overwhelmed buyers, leading to another drop that took prices to a new session low of 6050.75.
Heading into the close, the market saw another failed bounce attempt at 6073.75 before settling lower at 6064.75. The steady sell-off into the final hour confirmed the bearish momentum, leaving the ES significantly weaker than its earlier highs.
Market Sentiment & Closing Imbalance
The bearish structure of the session was reinforced by heavy selling into the afternoon. Attempts to reclaim higher levels were consistently met with resistance, signaling strong institutional distribution.
A large sell imbalance of 364M emerged at 3:50 PM, with -51.9% on the dollar-weighted imbalance side and -51.0% on the symbol imbalance. This was quit light considering the selling during the day.
In the end, it’s been a big tariff mess. In terms of the ES’s overall tone, I wonder if we have a broken arrow. In terms of the ES’s overall trade, volume was high on Friday at 1.85 million contracts traded and as of 7:30 PM Sunday night, volume stood at 120K.
Technical Edge
Fair Values for February 3, 2025:
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SP: 26.27
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NQ: 105.65
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Dow: 140.42
Daily Breadth Data 📊
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NYSE Breadth: 21% Upside Volume
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Nasdaq Breadth: 53% Upside Volume
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Total Breadth: 49% Upside Volume
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NYSE Advance/Decline: 28% Advance
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Nasdaq Advance/Decline: 35% Advance
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Total Advance/Decline: 32% Advance
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NYSE New Highs/New Lows: 97 / 30
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Nasdaq New Highs/New Lows: 119 / 95
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NYSE TRIN: 1.21
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Nasdaq TRIN: 0.46
Weekly Breadth Data 📈
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NYSE Breadth: 48% Upside Volume
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Nasdaq Breadth: 51% Upside Volume
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Total Breadth: 50% Upside Volume
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NYSE Advance/Decline: 47% Advance
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Nasdaq Advance/Decline: 41% Advance
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Total Advance/Decline: 43% Advance
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NYSE New Highs/New Lows: 253 / 74
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Nasdaq New Highs/New Lows: 334 / 342
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NYSE TRIN: 1.05
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Nasdaq TRIN: 0.79
MTS Levels:
Room Summaries:
Polaris Trading Group Summary Friday, January 31, 2024
Overview:
Friday was a strong trading day, with key targets in both the NASDAQ (NQ) and S&P 500 (ES) fulfilled with “ultra precision.” The session was full of opportunities, with both bullish and bearish cycles playing out as expected. The Taylor 3-Day Cycle proved highly effective, leading to cycle range highs being “nailed” on both indexes.
PTGDavid reminded traders that Fridays are “Gravy Days,” meaning if you’ve had a good week, there’s no need to overtrade.
Morning Session:
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NASDAQ (NQ) & S&P 500 (ES) Transition to Cycle Day 2
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NQ target zone (21800-21812) hit with “ultra precision.”
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ES cycle rally (6094.50 to 6122-6136) also achieved.
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PTGDavid compared the trade strategy’s accuracy to being “hotter than a two-peckered goat.”
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Crude Oil (CL) Short Trade
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PTGDavid and Sorem both worked a short setup on CL.
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Targets were met successfully, with final target filled at 71.47.
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NASDAQ Strength
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NQ led the market early, described as a “gap and go” day.
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Traders watched for further upside with targets in the 892-927 zone.
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Midday & Afternoon Action:
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ES Hits Cycle Target at 6136 (PTGDavid posted a screenshot)
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NQ Cycle Penetration Target Fulfilled
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Traders watched for a potential push to 22000-22024.
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Market experienced end-of-month “window dressing.”
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The 2 PM “Shake and Bake” Session
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PTGDavid stepped away for a bit but returned to major market volatility.
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News catalysts hit, including Trump tariff announcements.
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Bearish Scenario Unfolds in ES
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PTGDavid pointed out that sustaining offers below 6095 could push prices to 6075-6070 (target hit with precision).
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A reversal began unfolding right after hitting the bearish target.
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End of Day Wrap-Up:
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“Walk Away Trade” – Cycle Highs on ES & NQ Nailed
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PTGDavid highlighted how well the Taylor 3-Day Cycle guided trades.
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The Market On Close (MOC) imbalance grew to $1.1 billion in sell orders.
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End-of-session Trump tariff headlines created late volatility.
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Closing Remarks
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FAFO (F* Around & Find Out) theme of the day!**
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PTGDavid predicted that money managers and analysts will be busy digesting market impact into February.
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Key Lessons & Takeaways:
✅ Precision trading: Targets were consistently hit with accuracy.
✅ Cycle analysis works: The Taylor 3-Day Cycle helped pinpoint market moves.
✅ Stay nimble on news: Trump tariffs and end-of-month adjustments impacted the late-day session.
✅ Gravy Day mindset: No need to force trades if you’ve had a strong week.
Looking Ahead:
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Sunday Globex opened lower into the 3-Day Central Pivot Zone.
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Bulls need to reclaim 5997 in ES for bounce/reversal potential.
Final Thought:
Friday was a textbook example of trading with precision and discipline. Whether you were riding the trend, shorting CL, or navigating news volatility, the setups were clear and effective.
Bring on February! 🚀
DTG Room Preview – Monday, February 3, 2025
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Market Overview
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Stock futures are sharply lower as oil prices surge (~5%) and global currencies react.
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The Mexican peso and Canadian dollar have tumbled, while the US dollar nears a 1-year high.
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Bitcoin hit a 3-week low, gold is down, and the Treasury yield curve is flattening on stagflation fears.
Trade War Escalation
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Trump’s tariffs on Mexico, Canada, and China take effect Tuesday.
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Canada retaliates with 25% tariffs on $107B in US goods; Mexico and China vow the same.
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Economists predict Canada could enter a recession due to the tariffs.
Impact on Markets & Industries
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Tariffs threaten US economic growth, corporate earnings, and inflation, potentially altering the Fed’s rate policy.
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The auto industry faces major disruptions, with US auto plants potentially shutting down within a week due to supply chain impacts.
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Other affected goods: clothing, computers, whiskey, avocados, and many Amazon items, reflecting China’s 10% tariff.
Government & Regulatory Moves
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Trump’s DOGE agency (acting like secret police) reportedly took control of a federal payment system affecting Social Security & Medicare payments.
Corporate Earnings Watch
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Before market open: SMCI, PYPL, TSN, BCH, IDXX, MUFG, RYAAY.
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After the bell: PLTR, NXPI, ACM, BRBR, EQR, EG, DOC, CLX, WWD.
Key Economic Data & Events
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9:45 AM ET – S&P Global Manufacturing PMI
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10:00 AM ET – ISM Manufacturing PMI, Prices, and Construction Spending
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12:30 PM ET – Atlanta Fed’s Bostic speaks
Market Sentiment & Technical Levels
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Volatility spiked Friday on tariff news.
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Whale bias is bullish into the US open on high overnight volume.
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ES Technicals:
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Support: 5935/32s, 5891/94s, 5728/23s
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Resistance: 6206/09s, 6411/16s
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50-day MA (6050.25) held Friday’s low, but the overnight session gapped through.
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Traders are closely watching whether the short-term uptrend holds or if Trump’s tariffs force a break lower.
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ES Week vs. Week
The pivot line for today is set at 6,067.25. This is the key level that determines the market’s directional bias. With the current gap down it will be a hard reach. To switch our long-term projection to bear we need to place orders below 5895 so bulls are still in control here.
On the upside, the first resistance to watch is at 6,000.00. If buyers can push through this, the next target is 6,030, followed by 6,050. Beyond this, a move towards 6,081 would be spectacular and tell us markets are coming to grips with the tariffs. There will be tariff news intraday so I imagine some wild swings.
On the downside, watch 5906 for support and below that 5882.
NQ Week vs. Week
The bulls are playing for a hold today, but it’s going to be tough to advance with the overnight bar currently trading around 21,222. Bulls will need a strong push to regain price control at 21,589.25 (pC)—a critical level for upside momentum.
On the downside, 20,954 has to hold as support again, as this was the overnight low. If the bears gain control and push below this, the next key level to watch is 20,625.25 (s2r), which could open the door for a deeper decline.
For today, expect a battle around 21,589.25—above it, bulls can try to reclaim control and push towards 21,918.25 (pR). Below 20,954, bears will likely press for new lows.
Calendars
Economic
Important events for the rest of the week:
S&P 500 Earnings
Recent
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Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.
Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!
This post goes out as an email to our subscribers every day and is posted for free here around 2 PM ET. To get your real-time copy, sign up for the free or premium version here: Opening Print Subscribe.
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