by Danny Riley

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.

Navigating Volatility: Rising Yields, PPI, and Market Strategy

Follow @MrTopStep on Twitter and please share if you find our work valuable!

Our View

Heading into the trading session today, I’m keeping an eye on the rising Treasury yields—seeing the 10-year note hit 4.76% overnight is a clear signal that volatility might be on the menu. Tech stocks could feel the heat, especially with those new semiconductor export restrictions in play.

I’m also looking ahead to the PPI release today—analysts are calling for a 0.3% increase, which might hint that inflation is starting to stabilize. But honestly, last week’s strong job numbers make me wonder if the Fed could still tighten the screws with another rate hike. Borrowing costs creeping up would definitely add more complexity.

Banks kicking off their earnings midweek will be a big one too. It’s always interesting to see what they say about consumer demand and credit trends—it gives a pretty solid read on the broader economic health.

For now, I’m staying cautious. Tech’s reaction to regulation changes will be telling, and I’ll keep an ear to the ground for any healthcare sector buzz ahead of earnings. Between higher yields and all this uncertainty around inflation, it’s shaping up to be a day to tread carefully.

-Marlin

Our Lean

Globex has us up to flat at the open as of 8 am ET. Yesterday’s MOO weakness on a strong gap down was a tell for upward buying pressure post-open as over-the-weekend pricing was rejected.

PPI numbers are at 8:30 am ET will most likely tip our gap one way or the other. We are still in the sell-the-rips mode although the bull/bear line is coming down. The market is going to have to climb higher, right now that is in large swings that are giving plenty of opportunity to make and lose money either long or short.

Our Lean: Looking for trades after massive moves (30-50pts ES), then take small positions and try to hold on for gains. If there are no inflation surprises over the next couple of days, the pattern would be a multi-day gain.

-Marlin

MiM and Daily Recap

The ES came into the morning looking over the edge, with the Globex session trending lower after an initial high of 5867.50. The overnight low of 5809 was printed around 4:00 a.m., and the market hovered near that level for about an hour before staging a slight recovery to 5834. However, the momentum fizzled, and the ES sagged back down, opening the regular trading session at 5817.50.

The regular session began with a quick dip to 5813, marking the session low. The ES traded in a choppy range for the first couple of hours, expanding higher and then retracing back towards the open, but never really testing the open until 11:58 am. It mad a false breakdown to 5816.50 and then reversed and squeezed higher in quick fashion.

An hour later, the ES moved through the previous regular session’s high of 5851.75, confirming a continuation to the upside. It checked back to this level a few times but ultimately left the overnight low and the opening price in the dust as shorts covered ahead of the PPI report scheduled for release today. By 2:42 p.m., the ES printed a new high for the day at 5871 before settling into a range between 5856 and 5870 for the final hour of trading.

As we came into the 3:50 p.m. MIM release the ES traded 5862, and with a muted announcement of about 457 million to buy, it popped to new highs on the day printing 5878.25 just before the imbalance flipped to a small sell of -180 million. The cash close settlement of 5874.50 proved to be another good buy as we traded higher post-market printing a high of the day at 5883.25 and closing the exchange at 5881.75, up 20.25 points (+0.35%), a potentially important higher close. Volume was higher than Friday with 1,69 million contracts traded.

The NQ closed basically unchanged at 20,992.25, down 5.50 points on the day with 607 thousand contracts changing hands.

How to read the MIM

Technical Edge

Fair Values for January 14, 2025
- SP: 38.31
- NQ: 156.33
- Dow: 227.08

Daily Breadth Data 📊
- NYSE Breadth: 57.3% Upside Volume
- Nasdaq Breadth: 42.8% Upside Volume
- Total Breadth: 44.5% Upside Volume
- NYSE Advance/Decline: 55.6% Advance
- Nasdaq Advance/Decline: 41.7% Advance
- Total Advance/Decline: 47.1% Advance
- NYSE New Highs/New Lows: 12 / 211
- Nasdaq New Highs/New Lows: 39 / 321
- NYSE TRIN: 1.12
- Nasdaq TRIN: 0.95
Weekly Breadth Data 📈
- NYSE Breadth: 42.9% Upside Volume
- Nasdaq Breadth: 54.1% Upside Volume
- Total Breadth: 50.5% Upside Volume
- NYSE Advance/Decline: 22.9% Advance
- Nasdaq Advance/Decline: 23.7% Advance
- Total Advance/Decline: 23.4% Advance
- NYSE New Highs/New Lows: 107 / 257
- Nasdaq New Highs/New Lows: 265 / 360

Room Summaries

Polaris Trading Group Summary – Monday, January 13, 2025

Morning Session:

Start and Key Announcements:
- David began the session officially at 9:15 AM ET. The day started with news that Take Profit Trader removed daily loss limits from their accounts, paired with a promotion offering a 50% discount using a PTG-specific code.
- There was active participation from newcomers, particularly Noah, who asked insightful questions about PTG’s strategies, software compatibility, and market approaches.
Early Trades:
- David reported early sandbox trades, capturing a 20-point range between 12 and 32. He emphasized staying non-directional early as the market rhythm was not clearly trending.
Educational Insights:
- Questions about tools, strategies, and charting were addressed extensively. Topics included order flow visualization, footprint charts, and market structure.
- David reiterated PTG’s guiding principle: “Stay in alignment with the dominant force.” He emphasized sticking to the plan and avoiding predictions.

Midday Session:

Market Observations:
- The market exhibited “chop,” requiring nimble decision-making. Conversations shifted toward funded account evaluations and trading techniques.
Educational Content:
- David clarified the availability of one-on-one coaching with quarterly memberships, helping traders build customized approaches for funded accounts. He reassured users about the reliability of PTG tools in professional setups.

Afternoon Session:

Key Levels and Market Action:
- Closing the gap near the LIS (Level of Interest Support) at 5865 became a focal point. David identified 5845 as a critical pullback level for long opportunities.
- Bulls faced challenges breaking free from the LIS Zone (5865 ± 5 points) but maintained closing momentum.
- A buy-side Market-On-Close (MOC) imbalance of $913M sparked small bullish reactions.
End-of-Day Observations:
- The session ended with the identification of 5875 as a potential pivot and LIS level for the following day. David noted that the bulls retained momentum heading into the close.

Key Highlights:

Successful Trade Opportunities:
- Early sandbox trade capturing 20 points.
- Clear identification of key pullback and resistance levels (e.g., LIS 5865, 5845 support).
Educational Value:
- Detailed answers to questions about PTG’s tools, strategy creation, and execution in live markets.
- Emphasis on staying disciplined and aligning with market rhythms rather than making predictions.
Lessons Learned:
- Trading in a choppy environment requires flexibility and adherence to predefined plans.
- The importance of understanding market tools and maintaining alignment with dominant market forces for consistent success.

The day was characterized by a balanced mix of educational content and practical trading insights, reinforcing PTG’s commitment to disciplined and strategic trading.

Discovery Trading Group Room Preview – January 14, 2024

Morning Market Brief:
- Market Overview: Treasury yields continue their climb, with the 10-year yield reaching a 14-month high at 4.8%. US bond sell-offs drove the dollar to a two-year high against global currencies, applying pressure on tech stocks.
- Fed Outlook: The CME FedWatch tool indicates markets now expect the next rate cut in September 2025, with only a modest 30 bps total reduction projected for the year. Focus shifts to tomorrow’s CPI data amid persistent inflation concerns.
- Commodities: WTI crude settled at $78.82, hovering near 5-month highs and adding to inflationary pressure.
- Geopolitical News: Negotiations for a ceasefire in the Israel-Hamas conflict show progress, with an initial 42-day agreement potentially releasing hostages and prisoners in exchange.
- Corporate News:
  - Moderna (MRNA) fell 16% after slashing its 2025 forecast by $1 billion due to weakening vaccine demand.
  - Nvidia (NVDA) dropped nearly 2% as new US export rules restrict AI chip sales to nations like China, Russia, and North Korea, requiring special licensing for orders exceeding 1,700 GPUs.
- Economic Calendar: Key data includes:
  - PPI: 8:30 AM ET
  - Federal Budget Balance: 2:00 PM ET
  - Fed speakers: Kansas City’s Schmid (10:00 AM ET) and NY Fed’s Williams (3:05 PM ET).
- Market Dynamics: Moderate volatility persists, with PPI and CPI data likely to shape near-term market direction. Overnight whale activity leans bullish into the PPI release.
- Technical Levels:
  - Resistance (R): 6025/22s, 6340/45s
  - Support (S): 5818/21s, 5786/83s
  - The ES bounced above its short-term downtrend channel bottom, suggesting potential for both bullish and bearish moves within the trend.
This summary provides insights into macro trends, key data points, and technical indicators driving today’s trading environment.

ES – Week over Week

That 5809.75 low yesterday should stay as the low over the rest of the week. We should have some continued bounce to the upside. Getting and staying above 5908 would be a good goal to have a multi-day upward trend. 5950 for an upside target seems achievable if the PPI/CPI data doesn’t hold any negative surprises.

NQ – Week over Week

Getting up and over the 21,124 level to start a multi-day buying spree in NQ seems achievable. If we can’t rally this AM, watch if 20,915 prints and doesn’t hold, then we could ride back down to 20,696. Watch inflation data.