by Danny Riley

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Tape Bombs & Tame Tariffs—Still Climbing

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Our View

One thing I do know: it’s not just the Mag 7 or 10 leading the market higher. The YM closed up 0.78%, and the RTY closed up 1.24%, while the ES and NQ gained 0.45% and 0.46%, respectively. Someone has been pouring money into small caps, and obviously, the earnings have been a big help.

It was a quiet session, and volume in the ES dropped again, down to 1.146 million contracts traded. Part of the cooldown could have to do with the fact that China’s tariffs were considered to be fairly tame, but now we have to wait to see Trump’s response, so it’s not time to let your guard down.

Our Lean

The ES is approaching its resistance zone at 6111-6120. That said, volume has dropped, and there are still a lot of shorts that have not covered and there are tons of buy stops.

Today, we have two economic reports and two Fed speakers, and Friday is the January jobs report. I think you keep playing the same way—if the market opens lower, you buy, if not, just be patient and buy the dips (clearly, there have been enough of them) while paying attention to the tape bombs.

Also, how about those late-day sell-offs and pops into 4:00 and after? I love playing that game, but I’m not strong enough to sit here all day but that has been a gimmie over the last several days.

MiM and Daily Recap

The ES has been back-and-filling between 6020 and 6070 on its way to new all-time highs. I would be much more confident if it weren’t for the tape bombs, but that’s the world we live in… Trump land.

Globex trading kicked off around 6042.75 and pushed as high as 6053.00 before settling near 6051.25, marking a modest uptick of 0.14% from the Globex open.

In the cash session ES opened lower again, and languished for the first few hours before dipping down to 6028.25 at 10:30—that was the gift of the day. I’m not sure I understand all the variables, but with the exception of last Friday and Sunday night, this has been a buy-the-lower-opens and buy-the-dips market

By that session’s close, the contract was back at 6086.00, up 35 points (0.58%) from the open. A short cleanup window followed, taking the market from 6086.00 to 6092.00 and closing at 6090.00, leaving the day’s full-session range spanning from 6020.25 up to 6092.00.

Intraday swing data showed multiple attempts at higher highs—like the push to 6059.50 near midmorning and 6070.75 shortly after noon—interspersed with dips toward support in the 6030 area. Later in the afternoon, the contract tested 6073.50 a couple of times but struggled to push decisively higher. By the final bell, market activity appeared rotational, as each rally was met by selling interest. The Market on Close flow showed a total of 1,480M, with 3,711 Buy$ versus 2,231 Sell$, and gauges leaning 62.5 percent on dollar flow and 55.1 percent on symbol count. While not strongly directional, these figures signaled enough caution to limit extended upside, keeping price action confined to two-way volatility.

Cash session was a virtual trend day up with some two way action along the way. 1.14M shares traded on the full day which is within norm.

How to read the MiM

Technical Edge

Fair Values for February 6, 2025

S&P: 23.69
NQ: 96.72
Dow: 122.07

Daily Breadth Data 📊

NYSE Breadth: 61% Upside Volume
Nasdaq Breadth: 63% Upside Volume
Total Breadth: 62% Upside Volume
NYSE Advance/Decline: 71% Advance
Nasdaq Advance/Decline: 67% Advance
Total Advance/Decline: 69% Advance
NYSE New Highs/New Lows: 93 / 29
Nasdaq New Highs/New Lows: 161 / 94
NYSE TRIN: 1.60
Nasdaq TRIN: 1.20

Weekly Breadth Data 📈

NYSE Breadth: 49% Upside Volume
Nasdaq Breadth: 52% Upside Volume
Total Breadth: 51% Upside Volume
NYSE Advance/Decline: 47% Advance
Nasdaq Advance/Decline: 41% Advance
Total Advance/Decline: 44% Advance
NYSE New Highs/New Lows: 253 / 74
Nasdaq New Highs/New Lows: 334 / 342
NYSE TRIN: 1.05
Nasdaq TRIN: 0.92

Guest Posts:

Dan @ GTC Traders

Purchasing Some Income

On January 9th , 2025 in this space, we wrote of our GTC Sample Portfolio features, and it’s three Strategies, the first of which was the Equity Fixed Income side of the portfolio, which bases its performance on the stability of yield and income rather than that of value and growth. We then went on to discuss an asset that we feel is a cornerstone of the 18 instruments (it could be argued 19 to 20 parts) used in this section of the portfolio.

Invesco’s Emerging Market Sovereign Debt ETF (PCY).

An ETF that is comprised by taking 80% of it’s total assets into outright holdings of an Emerging Market Debt Index, with no holding of the ETF as a Bond from said governments represents more than 3.5% of exposure to the Fund. We said at that time …

“ … At the moment? the PCY ETF is clearly in a downtrend. Our firm has been bearish on Emerging Market Debt Prices, bullish on yield for some time …“

Well … no longer. PCY has found a bit of footing, and is currently yielding approximately 6.57% or so ..

Yesterday, we went ahead and pulled the trigger on purchasing PCY as a longer-term core hold of the Fixed Income Portion of the Portfolio. A 6.57% yield is respectable, and we can collect those dividends into a synthetic DRIP, and use that cash to buy more of the other 17 to 18 assets in the Portfolio.

Such as Seagate (STX), which we also purchased yesterday for the same reason. Seagate (STX) does not provide as much yield at 3.02% annually. But Seagate (STX) provides us with more upside, allows us to be exposed to tech hardware … and provides more upside …

Until next time? Stay safe … and trade well.

Trading Room News:

Polaris Trading Group Summary: Wednesday, February 5, 2025

Morning Session:

The session started with some technical difficulties as the Rithmic data feed was offline, impacting Sierra Chart users. This was resolved before the open.
The market opened with a lower target zone fulfillment on @ES (6020) and @NQ (21435), aligning with the DTS Bear Scenario.
A sedated RTH opening was noted, with early discount structures forming on @ES and @NQ.
A short trade on Crude Oil (CL) triggered at the OPR level, reaching Target 2.

Mid-Morning & Midday:

ISM Services PMI came in lower than expected (52.8 vs. 54 forecast), causing an initial bullish reaction, but the move quickly faded.
A long setup on @NQ at the OPR level was triggered but was stopped out after a brief pop.
Market followed a Cycle Day 2 rhythm, leading to MATD (Morning After Trend Day) conditions, resulting in low momentum and balance.
PTGDavid stayed “hands-off” (SOH) for most of the morning, waiting for a prime opportunity.

Afternoon Session:

By midday, @ES hit its 6065-6070 initial upside target, confirming the DTS Bull Scenario.
The real directional move kicked in after consolidation, pushing @ES and @NQ towards upper target zones.
@ES reached the D-Level target at 6080, completing a strong afternoon rally.
As the session neared the close, mean reversion kicked in, followed by a closing ripper, fueled by a $1.2B MOC Buy Imbalance.

Key Lessons & Takeaways:

Patience pays: PTGDavid avoided early low-edge trades and waited for better setups.
Cycle Day 2 conditions led to choppy price action early, but the expected directional move came later in the day.
DTS levels and scenarios played out well, with both bearish morning targets and bullish afternoon targets fulfilled.
Market structure awareness (discount zones, balance, and transitions) helped traders stay on the right side of the market.

Overall, it was a disciplined trading day, with key levels respected and a strong finish into the close. 🚀

DTG Room Preview – Thursday, February 6, 2025

Market Recap & Movers

Alphabet (GOOG, GOOGL) fell 7% on Wednesday due to concerns over high AI spending with delayed returns, while Nvidia (NVDA) gained 5% as a beneficiary of that spending.
The Dow Jones closed up 0.7%, S&P 500 rose 0.4%, and the Nasdaq eked out a 0.2% gain.
Amazon (AMZN) reports earnings after the bell today; investors will focus on cloud and AI revenues.
Alphabet (GOOGL) and Apple (AAPL) face China’s antitrust probes, escalating U.S.-China trade tensions.
The 10-year Treasury yield dropped 9 bps to 4.42%, marking its lowest level of the year.

Political & Economic Updates

Trump’s policy decisions continue to add uncertainty, including controversial discussions on Middle East redevelopment and federal workforce restructuring.
Senate Democrats are holding a 30-hour floor protest over Russell Vought’s nomination for OMB head due to concerns over impoundment laws.
Impoundment crisis: Musk’s actions and Trump’s push for bypassing Congress on federal funds have brought this constitutional issue into the spotlight.
Trump’s federal employee buyout program saw 40,000+ signups, raising concerns about financial impact.

Earnings Calendar

Premarket: ConocoPhillips (COP), Yum! Brands (YUM), LLY, HON, ICE, RACE, and more.
After Close: Amazon (AMZN), FedEx (FDX), PINS, TTWO, FTNT, and others.

Economic Data & Fed Watch

Challenger Job Cuts (7:30 AM ET)
Unemployment Claims, Nonfarm Productivity, Unit Labor Costs (8:30 AM ET)
Fed Speakers: Waller (2:30 PM ET), Daly (3:30 PM ET)

Market Technicals

Volatility remains elevated but steady.
No clear whale bias—overnight large trader volume is light and mixed.
ES Levels to Watch:
- Resistance: 6130/28, 6253/58, 6453/58
- Support: 5915/20, 5710/05
- The ES 50-day MA (6054) held as loose support, with bulls attempting to gain control.

📊 Stay sharp and trade smart!

ES -Week to Week

The bull/bear line now sits at 6074.35, acting as the key pivot between a bullish backdrop and a more defensive stance. As long as price remains above this level, buyers maintain control; a break below would swing momentum to the bears.

Currently, ES hovers near 6091.75, showing resilience after its recent climb. The first major resistance is 6112.75, with a push above that opening the door to 6137.35 and 6153. A continuation higher could lead to a test of 6196.50 if buying pressure accelerates.

On the downside, watch 6086.50 as initial support. A slip beneath this area puts 6072.50 and 6042.75 into play. Below 6032, bears may gain traction, targeting 5991.75 and possibly 5952.25. The newly updated line at 6074.35 remains your intraday guide; if sellers drive the market decisively under that pivot, a more cautious stance is warranted.

NQ – Week to Week

The long-term bull/bear line sits at 22,080.50, serving as the major pivot between a broader bullish stance and a more cautious outlook. As long as price holds below this level we favor selling rips.

Currently, price hovers near 21,745, showing moderate strength after its recent climb. The first upside target is 21,795, with a push above that opening the door toward 21,840.50. If buying momentum continues, the next key resistance zone is 22,023.25 to 22,061.75, followed by 22,080.50—a level whose breach could accelerate the move toward 22,389.75 and new highs.

On the downside, immediate support aligns with 21,763 and 21,702.75. A break below these levels would put 21,619.25 and 21,562 in focus. Should selling pressure intensify, watch 21,429.75 and 21,398 as deeper support areas. Any failure to hold above 21,702 would signal a clear shift to a defensive posture, handing momentum to the bears.

Overall, bulls need to defend initial supports and clear 21,795 to maintain the upside push. A breach below 21,702 would confirm a bearish turn, potentially opening the door for a larger retreat.