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Tariffs, Recession, Inflation and the S&P 500
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Our View
Trump set off a bomb on the stock market Sunday, warning about a potential recession, and followed it up yesterday with comments on war and a US economic transition. The result? The wheels came off the wagon—consumer confidence is falling off a cliff.
Everything was moving: bonds, grains, gold, silver, Bitcoin—you name it, it was in motion. The ES traded down to 5578.75 just after 3:05 PM, then rallied to 5641 by 3:37 PM. The NQ plunged to 19,272.25, down over 930 points at 3:07 PM and like almost every day the index markets got whacked and rallied up to 19,551 after 3:00 PM and settled at 19,463.50, 190.75 points off its low.
The tech-heavy Nasdaq 100 suffered some of the deepest losses on the day, falling 3.8%, its largest single-day drawdown since October 2022. At its intraday low, the index was down 4.7%, wiping out over $1 trillion in market value. The Magnificent 7—Apple, Microsoft, Alphabet, Amazon, Nvidia, and Meta—were hit hard, falling between 2% and 5%. Overall, the US stock market lost a staggering $4 trillion in value yesterday.
I tried to post updates on X, but Elon Musk reported that the platform was under a massive cyberattack.
The Pit Bull had a few comments to make about the day’s trade. He said what’s going on is real, that we all know how far Bitcoin can drop—it could fall 50% or even down to 59,000 and he said he can’t express how bad the stock charts look.
It’s apparent that Trump’s tariffs, eroding confidence in AI spending, and a batch of disappointing inflation and labor data have turned on the selling spigot.
Is it over? I don’t think so. But after three weeks of down, you have to wonder when the bounce is coming but the markets still need to get past Wednesday’s CPI number and Thursday’s PPT.
Our Lean
I didn’t think the ES was going above 5800, and my lean was straightforward—sell it. I don’t think the decline is over, but after the largest down day since October 2022, we could bounce further. However, all eyes will be on Wednesday’s CPI number.
Look, I say it all the time—I’m not an economist, but I don’t have to be to know the Fed stumbled. They lowered rates as inflation was ticking up, and seven stocks make up over a third of the market cap. In 2023, the Magnificent Seven (Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta, and Tesla) accounted for roughly 30.1% of the S&P 500’s market capitalization. By 2024, their share had increased to 34.6%. I think we all knew that it couldn’t last forever.
One of the big parts of recent selling has been coming from CTAs (commodity trading advisors). But the liquidation is over: CTAs are now short $10 billion after selling $193 billion in the last two weeks. I know a lot of folks want to blame Trump for the market selloff, but I’ll say it again—an overanxious Fed put itself behind the 8-ball at the end of 2024, and now they’ve become totally ineffective. I don’t listen to anything they say, nor do I want to hear it. Plain and simple, the writing was on the wall—the markets had gone too far, too fast, with too much over-investing in 10 stocks, and now institutions are bailing.
Since 1990, the average drawdown in the S&P 500 has been 14% in a calendar year. Drawdowns of at least 10% have occurred in 19 of the past 34 years. The last 10% correction happened during the 2022 stock market decline when the S&P 500 peaked at 4796 on January 3, 2022, before dropping 27.55% to 3498 by October 2022.
At 9:30 PM, the NQ was down almost 300 points, and the ES was down 70 points. The price action in both the day and night sessions is out of hand. That said, if the ES gaps down sharply, we could see some buyers on the open—maybe even me. But I have to stick with selling the big rips. Maybe we short-cover in front of tomorrow’s CPI number.
MiM and Daily Recap
The ES futures experienced significant selling pressure throughout yesterday’s trading session, exhibiting clear bearish momentum from the opening. The overnight Globex session set the tone early, opening at 5753.00 and trading down to a low of 5687.25. This bearish sentiment carried into the regular session, which opened at 5691.25, slightly above the Globex low. The initial bounce was short-lived, with the ES reaching an intraday high of 5711.25 by 09:42 AM, marking a minor rally of 32 points (0.56%) from the early session low of 5679.25.
After peaking at 5711.25, the market encountered steady selling pressure, creating a series of lower highs and lower lows. A significant downward move occurred from 09:42 AM through 10:54 AM, where the ES dropped sharply by 64.75 points (-1.13%), marking a critical intraday low of 5646.50. Buyers briefly emerged at this level, propelling the ES to 5682.00 at 11:36 AM, but sellers quickly regained control, driving prices down further to new lows throughout midday. Another substantial leg down occurred around 2:00 PM, with the futures printing the day’s ultimate low at 5571.50 at 15:09 PM, totaling a 59.75-point (-1.06%) decline.
Late-session buyers stepped in aggressively, generating a robust bounce that lifted the ES sharply from its session low back up to 5641.00 by 15:33 PM, registering a notable rally of 69.50 points (1.25%). The regular session closed at 5623.50, down 67.75 points (-1.19%) compared to the opening print and -151.50 points or 2.62% from the previous close.
The market’s tone throughout the day was markedly bearish, characterized by persistent selling and significant volatility. The Market on Close (MOC) imbalance further underscored the bearish sentiment, showing a sell-side symbol imbalance at -57.0%. Although these figures did not reach extreme levels, they underscored the broad selling pressure across equities heading into the close.
Overall, traders faced a challenging environment, with any bullish attempts swiftly reversed. The substantial late-day recovery, though impressive, underscores the day’s volatility rather than indicating a firm reversal in market sentiment.
Technical Edge
Fair Values for March 11, 2025:
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SP: 5.74
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NQ: 22.25
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Dow: 40.75
Daily Market Recap 📊
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NYSE Breadth: 23% Upside Volume
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Nasdaq Breadth: 25% Upside Volume
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Total Breadth: 25% Upside Volume
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NYSE Advance/Decline: 20% Advance
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Nasdaq Advance/Decline: 18% Advance
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Total Advance/Decline: 19% Advance
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NYSE New Highs/New Lows: 42 / 137
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Nasdaq New Highs/New Lows: 50 / 378
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NYSE TRIN: 0.85
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Nasdaq TRIN: 0.65
Weekly Market 📈
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NYSE Breadth: 43% Upside Volume
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Nasdaq Breadth: 50% Upside Volume
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Total Breadth: 47% Upside Volume
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NYSE Advance/Decline: 31% Advance
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Nasdaq Advance/Decline: 31% Advance
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Total Advance/Decline: 31% Advance
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NYSE New Highs/New Lows: 158 / 359
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Nasdaq New Highs/New Lows: 194 / 875
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NYSE TRIN: N/A
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Nasdaq TRIN: N/A
Trading Room Summaries
Polaris Trading Group Summary – Monday, March 10, 2025
Market Overview & Opening Action
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The market opened in a Cycle Day 1 (CD1), which typically suggests a decline in price action.
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Overnight action saw bulls slipping, and price fulfilled the 5700 – 5690 lower target zone as expected in the Daily Trade Strategy.
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NQ hit its projected CD1 average decline measure (19883) almost exactly, touching 19885 early on.
Morning Session – Bearish Momentum & Heavy Selling
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Bear Scenarios outlined:
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CL (Crude Oil) initiated a short trade off the Open Range with targets successfully filled.
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NQ and ES continued their declines, sustaining below key levels (e.g., 19945 on NQ, 5720 on ES), confirming further downside movement.
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Heavy liquidation occurred, with volume confirming the target zones.
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Price action dipped below 5690, reclaimed 90, and set up a PKB Long, showing an attempt at a bounce.
Midday: Continued Selling & Attempts at Stability
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11 AM Buy Programs briefly kicked in, showing 150-lot buying, but sellers remained in control.
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By 11:30 AM, there was some stabilization, but overall, selling pressure continued into midday.
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David took a lunch break & bike ride, noting that despite the weather improving, the markets were still under heavy selling pressure.
Afternoon Session – The “Tech Wreck” & VIX Surge
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Tech sector collapsed:
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MAGS7 down 5.5%
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SPX down 2.78%
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QQQ down 3.86%
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TSLA down 14.30%
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VIX surged 19% to 27.87
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Twitter/X was reportedly under a cyberattack, further adding to market volatility.
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David humorously referenced “Ass-Whooping” as an official glossary term, acknowledging the extreme market conditions.
Late Afternoon: Symmetry Levels & Capitulation into Close
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Symmetry Swing Levels were hit perfectly, confirming precision in market structure analysis.
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Despite the sea of red, a “Rally Monkey” moment was suggested as markets attempted a rebound.
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MOC (Market on Close) Sell Orders initially at $440M built up to $1 billion, confirming continued pressure into the close.
Post-Market Analysis & Looking Ahead
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Cycle Day 2 (CD2) expectations shared:
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ES CD2 Average Range: 100 points, potential rally of 86.50 points
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NQ CD2 Average Range: 468 points, rally potential 426 points
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Perfect tag on NQ’s D-Level with a reclaim of CD1 low, signaling a potential Turnaround Tuesday setup.
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Precision Laser Trading on ES, reclaiming the CD1 low at 5571, confirming technical alignment with the dominant force.
Key Lessons & Takeaways
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Trade with the dominant force – PTG’s Primary Directive (PD) emphasized staying aligned with prevailing market direction.
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Volume validation is key – heavy liquidation was a strong indicator of downside continuation.
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Symmetry Swing & Technical Levels were spot on – proving the value of disciplined market structure analysis.
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Always manage risk – PTG reinforced the importance of hard stop-losses and only taking AAA setups.
Final Thoughts
A brutal Cycle Day 1 with relentless selling pressure, culminating in a “Tech Wreck” and VIX surge. However, the session ended with key symmetry targets being hit, setting up a possible Turnaround Tuesday. Traders who stayed disciplined and followed PTG’s trade plan navigated the volatility effectively.
Discovery Trading Group Room Preview – Tuesday, March11, 2025
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Tech Selloff Intensifies: The Magnificent Seven stocks plunged over 4% on Monday, erasing $750 billion in market cap. Tesla (TSLA) led losses with a 15% drop, wiping out all post-election gains. Nvidia (NVDA) has now lost over $1 trillion in market cap since last week.
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Broad Market Declines: The S&P 500 is now less than 2% from correction territory, erasing seven months of gains. The Nasdaq saw its biggest one-day drop since September 2022.
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Wall Street Outlook Shifts: Citigroup and HSBC both downgraded US equities to neutral, favoring China instead.
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Bonds & Currency Moves: Bonds rallied as 10-year yields fell to 4.2%. The Japanese Yen surged to five-month highs, becoming the safe haven of choice.
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Corporate Earnings: Oracle (ORLC) missed estimates across the board. DICK’S Sporting Goods (DKS) and Viking (VIK) report premarket, while Casey’s General Stores (CASY) reports after the bell.
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Economic Focus: JOLTS Job Openings release at 10:00 AM ET.
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Volatility Surges: The ES five-day average daily range has hit 143 points as markets continue to churn.
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Bearish Whale Bias: Significant large trader volume suggests selling pressure heading into the US session.
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Technical Levels: The ES broke its short-term downtrend channel before bouncing off lower levels.
ES -Week to Week
The bull/bear line for the ES is at 5638.25 today, serving as the critical pivot for intraday sentiment.
Currently, pre-market trading is hovering just around this bull/bear line. If buyers successfully defend 5638.25, look for upside continuation with immediate resistance at 5732.75 and then stronger resistance near 5769.25. A break above these levels could open the path to the upper range target of 5822.00.
Conversely, failure to hold the bull/bear line at 5638.25 could resume downside pressure. Initial downside targets include 5620.00 and the recent low near 5571.00 and then our target low range at 5543.75.
For broader context, the significant higher-level resistance remains at 5915.00. Until price recovers above this area, the intermediate-term trend continues to favor the bears.
NQ – Week to Week
The bull/bear line for the NQ is at 19,557.50. This is the pivotal level to watch closely, as it marks the boundary between bullish and bearish momentum for today’s trading session.
Currently, pre-market conditions remain cautious. Staying below the bull/bear line at 19,557.50 keeps the bears in control, targeting immediate support at 19,272.75, with further downside risk towards 19,122.25 our target low range for the day. If selling pressure continues, deeper levels near 18,712 should be eyed.
On the upside, initial resistance stands at 19,992.50 our target high range for the day. Bulls need a sustained move above this level to regain momentum, targeting next resistance points at 20,167.50, and ultimately the upper range target at 20,402.00. Recapturing the bull/bear line at 19,557.50 is critical for shifting sentiment back to bullish in the short term.
Given recent bearish price action, traders should closely monitor price reactions at these key levels and maintain disciplined risk management. Our longer-term bull/bear line has moved to 20,807.
Calendars
Today
Important Upcoming
Earnings
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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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