on March 28, 2025

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From 5720 to 5779: ES Battle Lines Drawn

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Our View

You could see from the early trade that it was going to be a two-way street, but when the ES sold off down to 5720, bounced up to 5779.75, and then sold off and made 4 higher lows, it was not hard to see the buyers were trying to hold up the ES, which helped short-cover the NQ back up to unchanged to higher.

Later, the ES rallied up to 5771.25 but started selling off before the 3:50 imbalance. Initially, the MiM came out showing $300 million to buy, then jumped to $1.6 billion to buy. But the NQ (Nasdaq) rained down on the ES when it came out showing $2 billion to sell, with NVDA showing $550 million to sell and TSLA $260 million for sale.

Yesterday, the ES was the leader and the NQ was offers. I think what we are seeing is part of the end of the Q1 rebalance. The PitBull mentioned that we are entering T+2. It used to be T+3, but they changed the rule. T+3 meant that stock trades settled three business days after the transaction date—a rule in place before 2017 when the U.S. shifted to T+2.

_@Grok

Historically, T+3 (settlement three business days after the trade date) was used in the U.S. stock market to allow time for the manual processes involved in trade clearing and settlement. Before modern technology, brokers, clearinghouses, and banks needed extra days to confirm trades, transfer paperwork, verify funds, and update ownership records—tasks that often involved physical certificates and mailed confirmations. The three-day buffer reduced operational risks like errors or payment delays, ensuring smooth completion of transactions in an era when systems weren’t instantaneous.

Even as automation improved, T+3 persisted into the early 21st century as a standardized convention, balancing efficiency with the complexity of coordinating buyers, sellers, and intermediaries across markets. It was the norm until 2017, when the SEC shifted to T+2, reflecting faster electronic processing and a push to lower counter party risk and free up capital sooner. Other markets, like some in Europe, also used T+3 for similar reasons before adopting shorter cycles. The lag wasn’t about trading itself but the backend plumbing—think of it as the time it took to “mail the check” in a digital age.

Many years ago, it was thought that T+3 enabled the firms to front-run the positions—sell the losing stocks and mark up the winners. But today it’s fully automated. Still, my question is: with such a high level of technology and AI, it’s hard for me to believe that a stock can be bought or sold on Friday morning and settled on Monday, no matter where it closes. I’m sure it’s all allocated by programs now, but this type of buying and selling does affect the stock market in general.

Our Lean

This morning, the PCE number will be released at 8:30 ET. According to J.P. Morgan, they expect today’s PCE release (likely covering February 2025 data) to show a year-over-year headline PCE rate in the low 2% range—perhaps 2.2% to 2.4%—consistent with a cooling but resilient inflation environment. Core PCE (excluding volatile food and energy prices), which the Fed prioritizes, might be anticipated slightly higher, possibly 2.5% to 2.7%, reflecting persistent services inflation. These expectations align with their view of a robust U.S. economy (forecasting 2.1% real GDP growth in 2025), balanced against emerging pressures like tariffs and tighter labor markets.

Our lean: This is an economic big number, and it’s happening during the end of the first quarter. I think we could see a jump in both volatility and volume, and I cannot count out the ES breaking 5700.00. My guess is the rotation out of tech continues into the last trading day of March. The thing about Friday—especially a jobs Friday—is the big up and down gaps. They tend to be a fade.

If the ES is up or down sharply on the open with big Globex volume, I’m fading it. If the ES opens down hard, I’ll be a buyer and look to sell the 30- to 50-point rallies. Another not-so-great sign for the stock market is that gold got up to 3,083.30. If I’m wrong, it’s back up to the 5790 level.

As for levels, I have the 5720, 5690, and 5650. My lean is down, but as always, I can’t rule out some pops.

MiM and Daily Recap

Thursday’s session featured volatile but ultimately directionless action as the S&P 500 futures (ES) traded in a wide range but closed modestly lower on the day. The overnight Globex session was relatively contained, opening at 5737.25 and gradually lifting to a high of 5772.75 before settling at 5743.00, a gain of 5.75 points (+0.10%).

Regular session trade kicked off at 5742.75 and continued its fall from 8:35 AM, finding buyers at 5720.00 by 9:40 AM, marking a 41-point drop (-0.71%) from the 8:35 AM premarket high.

Bulls regained control through the morning, lifting the index to the session high of 5779.75 at 11:00 AM—nearly 60 points off the low and a full 1.04% rebound. That strength didn’t hold, as a quick retracement followed, pulling price down to 5748.25 at 12:00 PM. A modest bounce to 5770.00 by 12:20 PM set up another leg lower, bottoming at 5733.75 at 1:00 PM.

Afternoon trade saw a burst of energy with ES surging to 5762.75 at 2:50 PM, followed by a five-minute, 18-point drop to 5744.25, and then another push higher to 5771.25 at 3:20 PM. However, that strength faded again, giving way to a selloff that reached 5737.50 by 3:55 PM, just ahead of the close. The session wrapped up at 5740.50, down 2.25 points from the open and 17.75 points (-0.31%) below the previous day’s settlement of 5758.25. Total volume during the regular session was 1,235,640 contracts, with full-session volume hitting 1,510,818.

Thursday’s tape displayed choppy and indecisive price action, with traders fading both intraday highs and lows. Although the index rallied nearly 60 points off the early low to a morning high, each push higher attracted sellers, and no breakout attempt was sustained.

The closing Market-on-Close (MOC) imbalance was notable, maxing out at $1.822 billion to buy. The symbol imbalance only reached 58.1%, falling short of the 66% threshold needed to register as an extreme. Despite the bullish dollar skew, the impact on price was limited, as the final 15-minute selloff overwhelmed the imbalance and pushed prices back down into the 5730s.

Overall sentiment leaned neutral with a bearish bias, as multiple intraday rallies were sold and the ES settled below both the open and prior close. With a high-to-low range of nearly 60 points and multiple lower highs forming into the close, traders may look to Friday for directional clarity.

How to read the MIM

Technical Edge

Fair Values for March 28, 2025

SP: 47.55
NQ: 190.31
Dow: 308.05

Daily Breadth Data 📊

NYSE Breadth: 39% Upside Volume
Nasdaq Breadth: 57% Upside Volume
Total Breadth: 55% Upside Volume
NYSE Advance/Decline: 41% Advance
Nasdaq Advance/Decline: 44% Advance
Total Advance/Decline: 43% Advance
NYSE New Highs/New Lows: 39 / 86
Nasdaq New Highs/New Lows: 59 / 224
NYSE TRIN: 1.20
Nasdaq TRIN: 0.61

Weekly Breadth Data 📈

NYSE Breadth: 52% Upside Volume
Nasdaq Breadth: 54% Upside Volume
Total Breadth: 53% Upside Volume
NYSE Advance/Decline: 61% Advance
Nasdaq Advance/Decline: 57% Advance
Total Advance/Decline: 58% Advance
NYSE New Highs/New Lows: 105 / 146
Nasdaq New Highs/New Lows: 189 / 395
NYSE TRIN: 0.99
Nasdaq TRIN: 0.80

Guest Posts:

SpotGamma Founders Note:

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:

Futures closed flat on the day, despite the auto tariffs and AM data. Focus tomorrow turns to Core PCE.

Traders couldn’t muster enough force to overcome the large positive gamma strikes at 5,700 – 5,740, and HIRO flows were much more benign today <=$1bn (vs negative $3-6bn y’day). These were large 99th %ile strikes which we rely on as strong support and resistance.

The idea that some large gamma strikes kept things locked in today, despite fresh tariff fears, syncs with the idea that the new auto tariff issue slid vol expectations for after 4/2 higher (teal = today, yellow, y’day) as see in the red box and to the right, while Monday (4/1, pre-tariffs) saw a relative ping lower in IV’s. This is compared to much lower IV expectations into Tuesday night (gray), when SPX near 5,770.

The auto sector highlighted some interesting dispersion/correlation today, as TSLA was flat but GM, F, TM were all down. We understand that TSLA is one of the only manufactures that is 100% produced in the US, vs other companies which could be hit with tariffs. This fundamental statement may not be 100% correct, but it serves a larger point, below.

This Compass plot reveals significant dispersion across equity sectors, with tariff-sensitive sectors like Consumer Discretionary (XLY) and Semiconductors (SMH) showing high Put Skew Percentile and IV Rank, indicating investor fears of margin compression and supply chain disruptions. US manufacturing (XLB), and rate sensitives like real estate (XLRE), regional banks (KRE), utilities (XLU), remain less affected with hopes of lower rates. Embedded in these ideas are differing put skews, as traders press more sensitive sectors.

This signaling should help us parse winners and losers out of tariffs, as options prices reflect traders beliefs on winners and losers (i.e. reading sentiment). Further, it could produce some interesting trading opportunities in the weeks ahead based on relative options values.

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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

Trading Room News:

Polaris Trading Group Summary – Thursday, March 27, 2025

Positive Trade Highlights
- Initial Target Hit Early
  ES quickly fulfilled the 5765–5770 upside target zone from the Daily Trade Strategy, providing a clean early trade and a key reference point throughout the day.
- CL OPR Short Wins
  David called a short in crude oil at the open range level, and all downside targets were hit. A great early opportunity that developed cleanly and with momentum.
- ES Structural Shift Long
  After reclaiming the OPR midpoint at 5738, David flagged a structural shift to long bias. A successful backtest held, and price pushed higher back toward the morning highs, offering a solid long setup.
- NQ Discount Long
  A high-quality long opportunity formed in NQ as it played out from a discount zone. David called it in real time, and the market responded with a strong squeeze, aligning with the ES move.
- NQ Premium Short Later in Session
  A short opportunity developed during the afternoon session in NQ from a premium area, which also triggered cleanly and followed through.

DTG Room Preview – Friday, March 28, 2025

Tariffs Dominate Headlines
Markets remain volatile as the Trump administration’s shifting stance on tariffs—particularly around the upcoming April 2 “Liberations Day”—creates uncertainty. Threats toward Venezuela have led to a 50% plunge in the bolivar, and chaos is expected at U.S. ports due to overwhelming complexities in the Harmonized Tariff Schedule. Experts are calling the situation a “nightmare scenario” with reciprocal tariffs and unpredictable policy shifts adding to the burden.

Gold Surges Again
Safe-haven demand has pushed gold to its 17th record high this year, with futures reaching $3,114 amid rising trade tensions.

Fed & Economic Outlook
All eyes are on February’s PCE Index at 8:30am ET, with the Fed’s 2% inflation target under scrutiny. Powell’s “transitory” inflation narrative is losing traction, and Fed officials are signaling growing uncertainty about the economic outlook—one even citing “zero visibility.”

Today’s Key Data & Speakers
- 8:30am ET: Core PCE, Personal Income & Spending
- 10:00am ET: UoM Consumer Sentiment & Inflation Expectations
- Fed Speakers: Michael Barr (12:15pm ET), Raphael Bostic (3:45pm ET)
Market Levels to Watch – ES Futures
- Support: 5703/98, 5479/74, 5377/72
- Resistance: 5865/70, 6212/07
  Volatility is easing (5-day ADR: 73.5 pts), but data reactions could spark a directional move. No significant large trader (whale) bias overnight.

ES – Week over Week

The bull/bear line for the ES is at 5743.50. This is the critical pivot level for the day. Holding above it could favor buyers, while continued rejection below maintains bearish momentum.

Currently, ES is trading around 5738.00, slightly below the bull/bear line. If the price remains under 5743.50, pressure is likely to build toward lower levels. The first downside target is 5720.00, with the lower range target set at 5696.75.

On the upside, a move back above 5743.50 would put bulls in a better position. The first level of resistance sits at 5771.75 followed by 5779.75 and then with stronger resistance at 5790.25 which is the upper range target. If buyers can push through, the upper-range target for today is at 5832.

Overall, the market is leaning bearish while under 5743.50. A reclaim of that level followed by strength through 5779.75 would begin to shift the tone back toward the bulls.

NQ – Week over Week

The bull/bear line for the NQ is at 20,021.50. This is the key level that will determine bullish or bearish direction for today. A sustained move above this level would support a bullish bias while remaining below keeps sellers in control.

Currently, NQ is trading around 19,959.50, which places it below the bull/bear line. If it cannot reclaim 20,021.50, the downside pressure is likely to continue. The first support below is our target low range of 19,793.00, followed by 19,577.80. A break under these levels could bring the lower-range target of 19,453.50 into play.

If bulls can push NQ back above 20,021.50, the first upside target is 20,183, followed by a potential move into 20,250.00, today’s upper range target. Strong momentum through that level would open the door to resistance near the 20,427 to 20465.25 area.