Oil, Earnings, and Market Trends: Our Take on Current Events

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Our View

First, I want to thank everyone for sending me all the kind get-well messages. Many years ago, after having a bad day on the trading floor, I went to see my mom. She was from Fort Worth, Texas, and had a strong Texas drawl. As soon as I walked through the door, she looked at me and said, “Dboy, why are you looking so sad?”

I looked at her and said, “Mom, I just had a bad day, and I hang out with a bunch of mooches who take advantage of me.” She looked up at me and said, “Dboy, if you have four good friends by the time you’re 40, then you’re doing pretty good.” I clearly have more than that thanks to all of you through MrTopStep. I have to be honest, it feels pretty good to have so many well-wishers. Thank you all.

The ES sold off during Globex and opened lower, but buyers wasted no time pushing it to its first record high in 2025. The YM gained 379 points, while the tech-heavy NQ added 40 points. So far, the earnings season is off to a strong start. Trump’s deregulation policies and tax cuts have been a big positive for the stock market and the yield on the 10-year note rose to 4.636%.

As expected, Trump told business leaders at the World Economic Forum in Davos, Switzerland to make their products in the U.S. or face tariffs. He also called on the Saudi Arabia-led Organization of the Petroleum Exporting Countries (OPEC) to lower oil prices. Oil fell by 0.90% on the day, closing at $78.29 per barrel, down six days in a row. It’s very clear he’s not making friends and I don’t understand why he has to come out of the gate so hard, but that’s his ‘crazy’ style, the king of shock and awe.

Money is pouring into everything from T-notes to stocks. I don’t think people thought it was going to go this way but if you go back to the ES chart and the higher lows before Trump’s inauguration, that was probably your best hint. Everyone was short which only added to the buying power.

My lean remains the same as yesterday, if there’s a lower open, buy it. If we don’t get one and get a gap higher, you can give it a shot but this rally is not over. 6180, 6193, 6204, and 6220 are some levels I am looking at. On the downside, I think any 30- to 40-point pullback would be a decent entry.

MiM and Daily Recap

The ES traded mostly lower during the first half of the overnight session, hitting the day’s low at 6101.50 at 4:15 a.m. From there, it just wanted to move higher again and did, opening the regular session at 6113.50. The ES printed a quick session low of 6111.25 before beginning a steady climb and never looking back.

By 10:45 a.m., it had taken out the Globex high of 6120 and printed 6134.75 by noon. After a pause and a 10-point pullback lasting about 45 minutes, it resumed its upward momentum, hitting a new high of 6139 by 1:45 p.m. Another round of selling brought a similar 10-point pullback, leading into a range-bound period as the session approached the 3:50 p.m. MiM imbalance reveal was $2.6B to buy with price at 6137. 

The market reacted strongly to the reveal as it popped up in the last ten minutes to close the cash session at 6153.50, just two ticks below the regular session high of 6154. Post-market selling led to an exchange close of 6148.50, a gain of 28.25 points (+0.46%). The NQ (Nasdaq futures) closed at 22,021.75, up 40 points (+1.14%).

In the end, it was a perfect setup to buy a lower open or early weakness. In terms of the ES’s overall tone, once the markets started heading higher, there were few pullbacks, and when they did occur, they were minor. In terms of the ES’s overall trade, volume was steady at 1.1 million contracts.

How to read the MIM

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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

What’s Happening in the Market

The equity market is in a positive gamma regime most of the time, but market gamma printed slightly positive today for the first time since December 25. For context, since 2018, 38.12% of market days have opened in negative gamma. And unless it turns around for the futures, tomorrow will be another one of those negative days.

Founder’s Note:

Futures are flat after the S&P500’s ATH close at 6,118.

We start today with strong positive gamma, which should throttle S&P500 movement for day. The Call Wall did roll up from 6,100 to 6,140, which removes an overbought condition. However, the 6,140 Call Wall is a 0DTE position – that of Captain Condor.

Before we jump to the Captain, we note there are really large SPY positions at 610, which is is right around where the S&P500 closed. This adds to the local positive gamma, and anticipated price stickiness.

For the 3rd day in a row, Captain Condor is back with a massive +54k 0DTE SPX condor, doubling down from yesterday’s 30k spread in martingale style:

This, after the condor “lost” the last two sessions: a -12k condor on Wednesday, which the Captain then doubled to ~30k yesterday. We ball-park the losses on these spreads of ~$1.8mm & $4.5mm, respectively. Should the SPX trade through one of these spreads the loss would be near ~$8mm.

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, January 23, 2025

The day was marked by a blend of patience, precision, and a rewarding closing session. Here’s how it unfolded:

Morning Session

Midday Activity

Afternoon Session

End-of-Day Takeaways

Key Lessons

Closing Notes

David encouraged everyone to approach the day with resilience and patience, highlighting the ample opportunities ahead. The session ended with optimism and a clear focus on continued success.

DTG Room Preview – January 24, 2025