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End of Month, End of Rope — Watch the Rebalancing
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Our View
The ES traded a high of 6506.75 on overnight Globex and pushed even higher after the 9:30 open, reaching 6508.50 at 9:33, up 28.5 points from the previous day cash close. It made a few lower highs and then traded down to 6480.75 just before 10:00 AM. From there, it made a series of pops and small drops all the way up to 6520.50, up 20.75 points at 3:13. It then traded down to 6515.25 and rallied up to 6522.00, traded 6517.00 on the 4:00 cash close. The ES rallied up to 6523.00 at 3:54, and traded down to 6514.00 going into 5:00. It finished at 6516.25 on the 5:00 futures close, up 22.50 points or 0.35%.
In the end, if you didn’t buy the early pullback and hold, you missed the boat. Both the ES and YM made new all-time contract highs after the GDP number showed the U.S. economy grew at a faster pace than previously thought in the second quarter. In terms of overall trade, ES volume was so-so at 1.1 million.
Today’s economic calendar includes: Personal Income and Spending, PCE Index, Advanced U.S. Trade Balance in Goods, Advanced Retail Inventories, Advanced Wholesale Inventories at 8:30, Chicago PMI at 9:45, and Consumer Sentiment at 10:00.
Earnings are due from $BABA, $FRO, $DOOO, $JKS, and $NEF. It’s looking like thin pickings for stocks at the end of the Q2 earnings season.
Our View
@HandelStats noted that if the ES was up on Thursday, it would likely be down today. That could be the case, but there’s still a heavy load of economic reports, with Fed watchers zeroing in on this morning’s PCE number.
Goldman Sachs projects U.S. core Personal Consumption Expenditures (PCE) inflation to rise to 1.1% on a Q4/Q4 basis by the end of 2025. This is a downward revision from earlier this year due to signs of a more significant economic slowdown. It’s also the week 5 Friday options expiration and the end of the month.
It’s interesting—the Stock Trader’s Almanac shows Thursdays down 18 of the last 28 occasions, while Fridays have seen the ES up 13 of the last 24, but down 6 of the last 9—essentially the opposite of @HandelStats. Looking ahead, the Almanac also notes that Tuesday, the first trading day of September, has seen the ES up 18 of the last 29 occasions but down 9 of the last 16.
Our Lean
This all makes sense—there’s going to be a big end-of-month rebalancing mixed in with the week 5 Friday options expiration. I think the ES can rally, but I also think there will be some rallies to sell.
Our lean: I still think any early pullback or drop should be bought. If the CPI number pushes the ES down hard on the open, I’d look to be a buyer, keeping in mind the “gap double pump” rule. Low volume will initially favor the upside, but I think the last hour could see a lot of two-way flow.
If the ES gaps way up, I’d apply the same strategy: look for a double pump and then buy the pullback. I am concerned there could be a late-day walk-away.
Lastly, the ES is up 2.78% in August, and the NQ is up over 5%. Following a strong July and August, I’m not sure September is going to be as smooth.
According to the Stock Trader’s Almanac
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Worst Month for Stocks: September is historically the worst-performing month for major indices, including the Nasdaq, since 1950. The Almanac notes an average return of -0.5% for the Nasdaq in September since 1971.
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September Effect: The Almanac highlights the “September Effect,” where the Nasdaq and other indices (DJIA, S&P 500) tend to underperform, making it the only month with a negative average return over decades.
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Post-Hot July Pullback: After a strong July (gains of 3% or more), the Nasdaq has historically retreated by an average of -5.8% from its July close to a low in the second half of the year, often starting in September.
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Small-Cap Outperformance Early in Month: The Almanac notes that small-cap stocks, which can influence Nasdaq components, often see strength in early September as investors return from summer and seek undervalued stocks. This tends to fade by mid-month.
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Pre-October Volatility: September sets the stage for October’s high volatility, with the VIX typically starting to rise as the market anticipates larger swings.
If anyone ever says they “know” what the S&P is going to do next, they’re full of it. But what we do know is that the S&P is up 34.5% and the Nasdaq is up 43.1% from the April 7, 2025 lows. When there’s a rally of that size going into September and October, there are always some downside concerns.
Once we get past the historical weakness, the ES is going to 6900.
Holiday Schedule: Equities
Friday, August 29
Regular Hours
Sunday, August 31
5:00 PM – Open for Tuesday’s Trade Date
Monday, September 1
12:00 PM – Halt
5:00 PM – Trading Resumeskson Hole BOA Comments Page 1
Guest Posts:
Get instant access to our partners’ real-time market data and insights not available anywhere else. Here is last night’s Founder’s note getting you ready for today’s market and explaining the constraints in yesterday’s market. – MrTopStep
Founder’s Note:
Note: There will be no PM note tonight. Enjoy your long weekend!
Futures are off 30-50bps.. PCE is out at 8:30 AM ET. Its also month end, which we flag because that seemed to time with some selling in July.
TLDR: 6,500 is the biggest 0DTE strike on the board, and a good to in line PCE likely triggers a rally back to that level. If PCE is a miss, and the SPX breaks <6,450, then we’d look for a quick test of 6,400.
You make care about the PCE today, the market does not. SPX Fixed strike vol is flat this AM (vs light night) even though futures are off 30 bps and PCE is in an hour. Keep in mind these are <10% IV’s…so they really dont care.
The take here is that if PCE is a “nothing done” then SPX should push back to unchanged into this 3-day weekend. The curve ball is if the PCE is a major miss. The market is indeed unprepared for that – and any break <6,450 is risk off, as it likely leads to a test of 6,400.
The backdrop here is a 3-day weekend, and so it has to be quite ugly to force traders to own puts into that 3-day decay.
The 6,500 you can see here – its 98th %ile already and so if the SPX rallies a bit it becomes the 99th “magnet” for the seek and destroy algo. From 6,500 all the way to 6,450 is + gamma, which is why we see safety in this range. Below 6,450 you can see the hole to 6,400. On this point the 0DTE straddle is $23. Indicated SPX prices are 6,485, so 6,485+23 = 6,508. Our fair value top is 6,500…so the $23 straddle seems fair to a bit rich if we rally. To the downside, first check is 6,450 which is $35 below, and if things are really nasty then its an easy 85 to 6,400. Given this, you could make the argument that 0DTE puts/put spreads/put flies are not a terrible bet. Low odds of hitting, but if they do they can pay.
On the topic of downside hedging, we really like deep OTM SPX put flies. There is some path dependency to their payouts, but placing the first buy leg at some decent downside target like 6,200 or 6,100 (depending on time to expiration) can produce really nice payoffs. Granted, these are low odds (this market hates downside), but for ~75 cents you get a peak payout of 100. That being said, getting a pin on the downside is quite tricky, so we look at these as something we can monetize for a ~10-1 payout if downside occurs. Again – low odds, but pretty cheap to carry.
Here is a 9/19 exp 6,000 x 5,900 x 5,800 put fly, and the reason we structure so out of the money is because if the market does slide, we want to he movement of the 6,000 put to drive the spread price higher. If you were to place this higher (ex 6,300 x 6,200 x, 6,100) then the 2 short puts at 6,200 may initially jump a lot more in value relative to the 6,300, hurting the initial PNL.
Obviously if you go closer in expiration you can slide all these strikes higher.
Get instant access to our partners real-time market data and insights not available anywhere else. Here is last night Founder’s note getting you ready for today’s market and explaining the constraints in yesterday’s market. – MrTopStep
MiM and Daily Recap
The ES began the overnight Globex session firming up from the prior settlement at 6485.00, with an early push that carried to 6493.75 at 23:00. After a pullback, the contract dipped to 6485.00 at 01:45, marking a shallow low. Buyers regained momentum into the European hours, lifting prices to 6506.75 at 04:00. A wave of selling followed, driving ES lower to 6490.50 by 07:15. Ahead of the cash open, futures briefly reclaimed strength, touching 6508.50 at 09:30, before reversing sharply.
The cash session opened at 6500.00 and quickly tested both directions. After the early flush to 6480.75, ES rebounded to 6504.25 by 11:15, marking a strong intraday recovery of 23.50 points (+0.36%). The bounce was partially retraced into a mid-morning dip to 6488.50 at 11:25. A sustained rally then carried into the afternoon, with momentum peaking at 6513.00 by 12:55. A minor retracement followed to 6502.25 at 13:00 before buyers pressed to a new high at 6523.00 at 15:30. Into the final half hour, ES faded to a low pivot at 6514.00 at 16:00 before settling at 6517.00 on the 4:00 cash close.
On a session basis, Globex gained 15.00 points (+0.23%), closing at 6500.00. The regular session added another 17.00 points (+0.26%) from open to close, finishing at 6517.00. Combined, the full session advanced 31.25 points (+0.48%) versus the prior day’s settlement. The cleanup session gave back a fractional -0.75 points, leaving ES unchanged at 6516.25. Full-day volume reached 1,097,818 contracts, with nearly 904k traded during regular hours.
Market Tone & Notable Factors
The tone was constructive, with buyers regaining control after early volatility. The resilience at the 6480 handle set the stage for a measured grind higher throughout the day, culminating in fresh highs late in the session. The +22.50 cash-to-cash change (+0.35%) confirmed bullish continuation, with the market logging another incremental advance after recent consolidation.
However, the Market-on-Close (MOC) imbalance revealed notable selling pressure. The 3:56 PM snapshot showed a -$2.21B imbalance to sell, with -76.4% of notional flow skewed to the sell side and a -58.4% symbol imbalance. This marked a decent sell imbalance by standard thresholds, briefly weighing on prices into the closing minutes. Despite that, ES held firm above 6510 into the bell, showing underlying demand.
Overall, sentiment leaned bullish, supported by steady afternoon buying that absorbed late-day imbalance pressure. The ES closed near the upper end of the range, suggesting that dips continue to attract buyers. Heading into the final session before the holiday weekend, traders will monitor whether these gains can extend or if the outsized MOC sell interest signals near-term caution.
ES Levels
The bull/bear line for the ES is at 6508.50. This level will dictate market sentiment today. Trading above it favors buyers, while holding below suggests continued pressure from sellers.
Currently, ES is trading around 6496.25, below the bull/bear line, which keeps momentum leaning bearish. If weakness persists, downside targets come into play at 6489.50 and then the lower range target at 6475.25. A break under this level could extend the decline toward 6443.75.
On the upside, initial resistance is seen at 6516.25, followed by 6523. A strong move through these could open the path to 6541.75, the upper range target, with extension toward 6573.25.
Overall, the trend favors sellers while ES trades under 6508.50. Bulls need a firm reclaim of this level to shift momentum back in their favor and target higher resistance levels into 6541.75 and beyond.
NQ Levels
The bull/bear line for the NQ is at 23,715.50. This level is pivotal for determining the day’s directional bias. Trading above it keeps buyers in control, while sustained trade below signals potential weakness.
Currently, NQ is trading near 23,760, just above the bull/bear line. Holding above this level opens the door to further upside, with resistance at 23,803.75 and then our upper range target of 23,882.50. A breakout above these levels targets 24,039.75. Further resistance stands at 24,069.25.
On the downside, immediate support sits at 23,626.25. If sellers regain control below this, the next key level to watch is 23,548.25, followed by the lower range target at 23,487.50. A decisive breakdown could push the contract lower toward 23,391 and 23,404.75.
The overall tone remains neutral to slightly bullish as long as NQ holds above 23,715.50. A sustained break below flips momentum back to the downside.
Technical Edge
Fair Values for August 29, 2025
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SP: 12.55
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NQ: 53.92
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Dow: 67.6
Daily Breadth Data 📊
For Thursday, August 28, 2025
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NYSE Breadth: 50% Upside Volume
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Nasdaq Breadth: 63% Upside Volume
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Total Breadth: 61% Upside Volume
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NYSE Advance/Decline: 52% Advance
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Nasdaq Advance/Decline: 54% Advance
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Total Advance/Decline: 53% Advance
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NYSE New Highs/New Lows: 151 / 10
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Nasdaq New Highs/New Lows: 263 / 64
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NYSE TRIN: 0.90
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Nasdaq TRIN: 0.65
Weekly Breadth Data 📈
Week Ending Friday, August 22, 2025
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NYSE Breadth: 60% Upside Volume
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Nasdaq Breadth: 58% Upside Volume
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Total Breadth: 59% Upside Volume
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NYSE Advance/Decline: 79% Advance
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Nasdaq Advance/Decline: 66% Advance
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Total Advance/Decline: 71% Advance
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NYSE New Highs/New Lows: 260 / 57
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Nasdaq New Highs/New Lows: 490 / 247
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NYSE TRIN: 2.46
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Nasdaq TRIN: 1.33
Calendars
Economic Calendar Today
This Week’s High Importance
Earnings:
Trading Room News:
Polaris Trading Group Summary – Thursday, August 28, 2025
Thursday was a strong and well-structured trading day, highlighted by key levels playing out cleanly, measured execution, and great shared insights from the PTG community. Here’s how the day unfolded:
Morning Setup & Opening Trade
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Line in the Sand (LIS) was set by PTGDavid at 6485, which was quickly tested and held.
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Initial upside target to 6495–6505 zone was fulfilled early.
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The room confirmed bullish structure above the LIS, leading into the opening trades.
Execution Highlights
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A4 trade was entered near the open and discussed throughout the morning. Jimbo confirmed entry “right at the open.”
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Manny, after avoiding his usual open trades, waited for a reclaim setup around 6490–6492 and executed beautifully:
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Entry: 6493.25 after reclaim and confirmation via order flow and delta.
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Exit: Took partials at 6498 (+5), 6503 (+10), balance stopped at breakeven.
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Trade plan was shared in real-time with defined trigger, entry, target, and stop—a model in disciplined trading.
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Manny’s trade plan repeated a second time, showing consistent structure and rotation opportunities in the S3 environment.
Key Lessons & Community Insights
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Manny’s transparency on lessons from overtrading the open and the value of writing out trade plans offered a masterclass in developing trader discipline.
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DanV emphasized the importance of daily consistency: “If your process is A on Monday but by Thursday it’s D… it becomes random trading.”
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Room members discussed using tools like AVWAP and tick charts (e.g., 750 Tick for CL/NQ), reinforcing diverse but thoughtful approaches to structure.
Afternoon Strength & Targets Hit
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Market strength continued into the afternoon with PTGDavid noting:
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Money Box Target of 6518–6523 zone → fulfilled
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New All-Time High
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3-Day Cycle Target of 6520.25 → hit precisely
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PTGDavid’s quote: “I always have the receipts” — backed by charts confirming the targets.
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MOC Buy Imbalance of $1.3B added to the late-day bullish push.
Summary
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Solid trend day with levels respected and upside targets achieved cleanly.
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Key themes: discipline, patience, and execution.
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Multiple positive trades, especially Manny’s methodical long and David’s broader market read, stood out.
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Community participation was high, with excellent educational dialogue reinforcing PTG’s value as a trading room.
Positive Trades:
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A4 trade off the open
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Manny’s 6493.25 long reclaim trade → scaled out at 6498 & 6503
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Afternoon target fulfillment to new ATH at 6520.25
Lessons Learned:
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Avoiding impulsive early trades can save energy and capital.
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Writing out trade plans improves clarity, execution, and post-trade review.
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Consistency in process is crucial to long-term success.
DTG Room Preview – Friday, August 29, 2025
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Markets are focused on this morning’s 8:30am ET release of the Core PCE Price Index— the Fed’s preferred inflation gauge— with September rate cut odds still high at 85.1%. Volatility remains elevated, and volume may decline later ahead of the long U.S. holiday weekend. Whale bias is bearish into the data following large trader selling into Thursday’s rally.
Key Levels:
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Trendline Resistance: 6669/74s, 6701/06s
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Trendline Support: 6414/19s, 6349/54s, 5830/35s
News to Watch:
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Fed Gov. Lisa Cook is challenging her removal by President Trump in court this morning.
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The $800 de minimis import exemption ends today, impacting small e-commerce shippers.
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Geopolitics: India reconsiders ties with China amid tariffs; Mexico eyes tariffs on Chinese goods ahead of USMCA review.
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Premarket earnings: Alibaba (BABA).
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Economic Calendar: Core PCE, Trade Balance, Personal Income/Spending, Chicago PMI, and UoM Sentiment/Inflation.
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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!!
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