by Danny Riley

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Fed Talk and CPI: This Week’s Recipe for Market Whiplash

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Our View

Friday was a jobs number day—sell the gap up, wipe out. I have to be honest, I strongly felt that the ES and NQ were going to be a sale, but I didn’t expect an all-day sale. I knew there was a brick wall between 6111 and 6120, but I didn’t expect an all-day sell program.

I didn’t include it in the Lean, but the MrTopStep fade-the-jobs-Friday-gap rule has another part to it: if it works, you cover half and hold all day, sorry, my bad. As I continue to recover from being sick, I expect the OP to improve as well.

I don’t know what people were expecting from Friday’s jobs report, but I had a feeling it would be low. However, Trump added to the jitters Friday afternoon when he referenced Japanese Prime Minister Shigeru Ishiba and suggested that the U.S. will announce reciprocal tariffs on unspecified countries next week. Analysts have been warning that the tariffs could push inflation higher. Well, I’ve got news for you, grocery prices have already been affected and gas prices in Florida are jumping all over the place.

It seems like the public has already soured on the economy. Consumer sentiment in the University of Michigan’s February survey fell to its lowest reading since July 2024, and no one is really talking about rate cuts right now. In Friday’s OP, I mentioned that I was worried about the next few weeks of February, and I still feel that way.

The Trump administration is all over the place, from talking about taking back the Panama Canal to moving all the Palestinians out of Gaza. While some of the work that’s being done seems to be on track, other things seem off the wall. As I’ve always said, the S&P hates uncertainty, and clearly, the new administration is creating a lot of that and that’s not going to change

Our Lean

We have no economic reports or Fed speakers today, but the rest of the week is packed: CPI on Wednesday, PPI on Thursday, and 10 Fed speakers throughout the week.

Look, it’s okay to be bullish one day and bearish the next. Like I said, 2025 is not 2023 or 2024—there’s going to be a lot more two-way price action.

Our lean: I have a rule that says the ES tends to go sideways to higher after a big down day, but there’s always a but. I’m not sure how far it can go. Friday’s pit low was 6041.25, and the high was 6123.25, 82 points. The 50% retracement comes in at 6082.25. I think the markets will be on edge this week.

MiM and Daily Recap

The S&P 500 E-mini futures (ES) opened the session with a brief push higher, reaching 6123.25 at 9:54 AM before reversing lower. The initial rally faded quickly as selling pressure emerged, driving the market down to 6060.75 at 10:51 AM, marking a significant -1.02% drop. A minor recovery attempt lifted prices back to 6087 by 11:10 AM, but the bounce lacked conviction.

As the session progressed, another round of selling pressure emerged, leading to a fresh decline into the noon hour. ES fell to 6046.50 by 12:18 PM, with buyers unable to establish meaningful support. A brief rally attempt was capped at 6078.50 at 1:15 PM before renewed weakness took hold.

By late afternoon, ES struggled to maintain higher levels. A failed attempt to push higher at 6056.75 (2:51 PM) was quickly rejected, and prices drifted lower into the final hour of trading. The market saw some stabilization around 6050.00 at 4:00 PM but ultimately dropped to a cash close of 6049.2 with the full session closing at 5:00 PM at 6050.

In the end, like the upside this week has been all buy programs and Friday was all sell programs and sell stops, I think this is all part of the backdrop. In terms of the ES’s overall tone, it was weak but not as weak as the Nasdaq. In terms of the ES’s overall trade, volume was higher but it’s always higher when the markets sell off, 1.6 million contracts traded. For the full session ES was down about 1% for the day down around 57 points.

Market Sentiment & Closing Imbalance

Despite several intraday recovery attempts, the overall price action favored sellers, with each bounce facing strong resistance. Institutional selling remained dominant into the afternoon, preventing any sustained rebound.

The MIM imbalance started as a small 300M buy but flipped to a 1B sell imbalance at 3:55 PM. However, there was no significant symbol lean, indicating rotational activity rather than outright liquidation. The lack of a directional skew suggests a controlled rebalancing into the close rather than aggressive risk-off selling.

The price action into the final hour confirmed bearish momentum, leaving ES notably weaker heading into the weekend.

How to read the MIM

Technical Edge

Fair Values for February 10, 2025:

SP: 20.51
NQ: 84.19
Dow: 99.13

Daily Breadth Data 📊

NYSE Breadth: 31.9% Upside Volume
Nasdaq Breadth: 47.6% Upside Volume
Total Breadth: 45.8% Upside Volume
NYSE Advance/Decline: 26.6% Advance
Nasdaq Advance/Decline: 28.2% Advance
Total Advance/Decline: 27.6% Advance
NYSE New Highs/New Lows: 89 / 80
Nasdaq New Highs/New Lows: 150 / 164
NYSE TRIN: 0.69
Nasdaq TRIN: 0.42

Weekly Breadth Data 📈

NYSE Breadth: 47.7% Upside Volume
Nasdaq Breadth: 56.7% Upside Volume
Total Breadth: 53.1% Upside Volume
NYSE Advance/Decline: 50.9% Advance
Nasdaq Advance/Decline: 47.6% Advance
Total Advance/Decline: 48.8% Advance
NYSE New Highs/New Lows: 204 / 166
Nasdaq New Highs/New Lows: 344 / 394
NYSE TRIN: 1.06
Nasdaq TRIN: 0.59

Room Summaries:

Polaris Trading Group Summary Friday, February 7, 2024

Pre-Market & Opening Action:

The Non-Farm Payrolls (NFP) report came in weaker than expected (143K vs. 175K forecast).
Initial upside target of 6115 was tagged right on the NFP release.
Price action was largely centered around the 6090 LIS (Line in the Sand), which held well on the post-NFP dip.

Morning Session:

Market consolidated near 6090 before drifting higher.
The first target zone of 6115-6120 was reached as per the bullish scenario.
CL OPR Long Target 1 was also hit.
Some discussion on internals and broader market structure, with traders noting the market’s gradual upward drift.

Midday & Afternoon Action:

Price held at 6090, but sellers gained control.
Bearish scenario played out, with price sustaining below 6090 and dropping to 6075-6070 target zone, fulfilling the projection.
A quick drop caught some traders off guard, but no clear TTB (Tick Tick Boom) signals were observed.
Some technical difficulties reported with frozen charts, but they were resolved.

End of Session & Cycle Day Transition:

Cycle Day 1 began with the market looking to establish a firm low for a potential rally.
Lower target of 6047.75 was reached, marking the expected average decline.
NQ also hit its Cycle Day 1 Average Decline target (21560), reinforcing the 3-day cycle theory (“VOODOO!”).

Sunday Evening GLOBEX Session:

Bear scenario played out early, with price hitting 6020-6015 and reversing sharply into an aggressive buy opportunity.
Perfect Money Box Touch & Reversal occurred, confirming the strategy’s precision.
Later in the evening, the bull scenario also fulfilled its 6070 target for a complete round-trip move.

Key Takeaways:

Ultra-precise levels played out beautifully, with both bullish and bearish targets hit.
NFP volatility provided early opportunities, with the LIS (6090) proving to be a critical pivot.
Cycle Day 1 framework held strong, with expected decline levels getting tagged.
Sunday night GLOBEX price action confirmed strategy accuracy, with both bull and bear moves playing out as expected.

DTG Room Preview – Monday, February 10, 2025

The first week of February ended with little change for the indices. The S&P 500 remained flat, while the Nasdaq and Dow Jones both fell about 5% amid a packed week of corporate earnings, a hot January jobs report, and evolving Trump tariff policies.

Key Market Insights
- Earnings season progress: Over 62% of S&P 500 companies have reported, with 16.4% year-over-year earnings growth on pace.
- Inflation and Fed outlook: The CPI report on Wednesday will provide fresh inflation data. The resilient job market makes near-term Fed rate cuts unlikely.
- Trade policy shifts: President Trump plans to announce 25% tariffs on steel and aluminum today, with more tariffs expected mid-week.
- U.S. debt and policy standoff: Trump suggested U.S. debt figures may be overstated, while federal judges have blocked his domestic aid freezes, though funds are not yet flowing.
- Chip sector disruption: Taiwan Semiconductor Manufacturing Company (TSMC) lowered its Q1 forecast following production disruptions from recent earthquakes.
Earnings Reports
- Premarket reports: McDonald’s (MCD), ANET, BCH, CAN, L, MNDY, ON, ROK, TEM, TRMB.
- After-hours reports: ALAB, CINF, BAP, MEDP, VRTX.
Market Conditions
- Low economic calendar impact: No major data releases today.
- Volatility: Moderately high, with ES 5-day ADR at 81 points.
- Large trader activity: Overnight volume leaned bullish but remained too light for significance.
- Technical levels: The ES short-term downtrend channel top held Friday’s high, leading to a retracement towards mid-channel levels.
Chart Link: Market Chart

Stay tuned for key earnings and inflation data this week.

ES Week vs. Week

The pivot line for today is set at 6,062.60, which is the key level to determine the market’s directional bias. Currently, we’ve built a decent gap up, trading around 6,076. The upper resistance level is 6,109, and for the bulls to gain momentum, they need to break above 6,123 (the previous high). Holding 6,062 will be crucial for the bulls.

On the downside, support is at 6,016, which is near where Sunday Globex opened. This could serve as a decent target for the bears. If the market breaks below this, the next support to watch is at 6,005.

NQ Week vs. Week

The bulls are aiming for some upside past 21,968. The premarket had a weak open but has since gained nicely overnight, sitting up by around 0.5%. However, advancing further will be tough. Watch how the gap holds and pay attention to buying sentiment at the MIM open. The upside target for today is 21,898. To turn the long-term NQ chart bullish, a solid close above 22,099 needs to be established.

On the downside, 21,425 is a critical line in the sand. Trades below that level would signal bearish sentiment and could potentially lead to a move towards the 21,200 area.