by Danny Riley

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Rising Risks: Fed, Bonds, and Gold Point to Uncertain Markets

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Our View

The NQ was the weak link yesterday right from the get-go. While the ES closed down 23.5 points, it was held captive by the weakness in the NQ, that fell 252 points. As of yesterday’s close, the ES is 2.7% off its high, and the NQ is 4.0% off its high.

I can’t rule out more rallies, but I think the “Trump bump” is over. The ES is down 166.5 points from its contract high at 6166.50 in just 3 sessions. I have a bad feeling about the markets. That doesn’t mean they can’t or won’t rally, but it seems like there is ‘new’ bad news coming out almost every day.

According to Goldman Sachs, hedge funds exited U.S. tech and media stocks in the two weeks leading up to February 21 at the fastest pace in six months—just as NVDA is set to do its investor call on Wednesday. According to LSEG, Nvidia is now the world’s second most valuable company, with a 6.3% weighting in the S&P 500 (.SPX). Its shares have skyrocketed over 550% in the last two years.

After a 17% drop following China’s DeepSeek AI and a nearly $800 billion decline in Nvidia’s market cap, the stock has almost recovered most of its losses. Still, it’s clear that a cheaper Chinese rival has cast a fair amount of doubt on the extensive amount of money being spent in the U.S. on AI development.

Personally, I think there has been a gross level of spending by some of the AI firms in the US and there could be a rude awakening coming. Maybe not right now, but I feel strongly it’s coming even if there is strong demand for NVDA’s H2O from China.

I was there during the Dot-Com bubble, and while I’m not saying this is the same thing, there are a lot of similarities. The main one is the over-investment in a handful of tech stocks. I don’t know when or how big it will be, but a larger decline is coming.

Does that mean the ES can’t go to 6200 or higher? No. But the higher the markets go, the riskier they become. The Fed is useless, the bond market scares me, and let’s not forget about $3,000 gold. It’s all a prelude to something big, and I don’t think it’s a question of if—it’s a question of when.

Our Lean

Today, we have the consumer confidence report, three Fed speakers, and Trump is set to sign more executive orders.

The ES hit a day low of 5994.50, and on Globex, it recently traded at 5959.25. I can’t rule out a bounce, but I think we see lower prices ahead. I’m looking to sell into 30- to 50-point short-covering rallies.

From Jeff Hersch from the Stock Trader’s Almanac:

A Time For Market Patience Turn Turn Turn

Buying the dip? Mega cap techs? Perhaps waiting makes sense. Feels like a correction is in the works. Note typical seasonal February & Post-election year Q1 weakness in the charts. S&P hit ATH last week with poor breadth. President Trump is shaking things up like never before. Meanwhile, we are not even down 5% yet (except for R2K) and a retest of the election gap would only be a 6% correction for SP500.

MiM and Daily Recap

Premarket, the ES at 9:00 AM was trading at 6062.50 and then opened the regular session at 6050.00 (12 points lower) before quickly moving even lower, establishing the session low of 5994.50 by 10:06 AM, marking a 68-point decline (-1.12%) from the 9:00 AM high. This initial leg down was met with a strong rebound as buyers stepped in and pushed the market higher, reclaiming lost ground into midday.

The rally persisted until 12:45 PM, when the ES hit 6048.50, a 54-point bounce off the morning low. However, sellers re-emerged, causing a pullback to 6035.00 at 1:00 PM (-13.50 points, or -0.22%). The market quickly regained footing and printed another lower high of 6047.00 by 1:18 PM, showing hesitation at higher levels. From that point forward, weakness set in, leading to a steady grind lower into the late afternoon.

By 3:57 PM, the ES made a new low of 5996.00, down 51 points (-0.84%) from its prior peak, signaling a clear shift in sentiment. A small bounce followed, with the market reaching 6009.50 at 4:12 PM before settling near session lows.

The final regular session close came in at 6002.25, down 47.75 points (-0.79%) from the open and 28 points lower than the previous regular session close. The post-market cleanup session saw minor price stabilization, closing at 6005.50.

The overall tone was bearish, with the early weakness setting the stage for a midday recovery that ultimately failed. Despite the strong bounce off the morning low, lower highs in the afternoon confirmed selling pressure. The close near session lows further emphasized the weakness.

From a broader perspective, the full session data showed a 35.25-point loss (-0.58%) from the prior day’s close, with the regular session down 28.00 points (-0.46%) from the previous settlement. Volume was substantial at 1,735,866 contracts, with 1,445,385 occurring during the regular trading session.

The MIM played little role into the close.

How to read the MIM

Technical Edge

Fair Values for February 25, 2025:

SP: 14.87
NQ: 58.19
Dow: 67.99

Daily Market Recap 📊

NYSE Breadth: 45% Upside Volume
Nasdaq Breadth: 32% Upside Volume
Total Breadth: 33% Upside Volume
NYSE Advance/Decline: 45% Advance
Nasdaq Advance/Decline: 35% Advance
Total Advance/Decline: 40% Advance
NYSE New Highs/New Lows: 43 / 87
Nasdaq New Highs/New Lows: 61 / 256
NYSE TRIN: 1.03
Nasdaq TRIN: 1.13

Weekly Market 📈

NYSE Breadth: 45% Upside Volume
Nasdaq Breadth: 53% Upside Volume
Total Breadth: 50% Upside Volume
NYSE Advance/Decline: 34% Advance
Nasdaq Advance/Decline: 31% Advance
Total Advance/Decline: 32% Advance
NYSE New Highs/New Lows: 183 / 129
Nasdaq New Highs/New Lows: 396 / 312
NYSE TRIN: 1.18
Nasdaq TRIN: 0.83

Trading Room Summaries

Polaris Trading Group Summary – Monday, February 24, 2025

Market Overview & Early Session

The overnight session saw price action bouncing into the 6065-6070 target zone as outlined in the Daily Trade Strategy (DTS).
Bullish scenario expected a sustained bid above 6045 to target the upper zone.
Bearish scenario anticipated a move below 6045, with an initial target of 6025-6020.
Early lean favored selling, with a potential retest of the 6024.50 prior low in play.

Morning Session – Bearish Pressure & Short Plays

The A4 short trade setup was active early on, and price moved lower as expected.
Lower target zones were fulfilled as the market experienced long liquidation pressure.
Both ES and NQ hit the D-Level Money Box Zone, leading to an initial buy response from traders.
Despite the bounce, the short bias remained intact until a significant reversal signal appeared.

Midday – Reversal & Bullish Recovery

A successful retest of the intraday low trapped late shorts, leading to a sharp bullish reversal.
Price reclaimed 6024.50, a key inflection point, and converted it into support, confirming a bear-trap scenario.
The reversal was ultra-precise from the D-Level Money Box Zone, showcasing strong rhythm-based trading opportunities.
A4 long trades were initiated and managed successfully.
Price returned to the prior close, shifting sentiment towards the bulls for the time being.

Afternoon – Resistance & Final Hour Weakness

Despite the recovery, resistance at 6045 and 21653 in NQ held strong, capping upside potential.
New longs became riskier with price up against key resistance.
During Power Hour, a new swing lower began, leading to speculation of a late-day flush.
The A4 short trade into the close was highly successful, with a strong end-of-day sell-off confirming the strategy.

Key Takeaways & Lessons Learned

Precise trade execution allowed both short and long setups to work according to plan, offering opportunities on both sides.
Discipline in trade management ensured great execution with minimal risk exposure.
Key levels held significance, with 6024.50 acting as a crucial pivot point, first as resistance and later as support.
Strong rhythm-based trading provided clear market structure and high-probability setups, reinforcing the effectiveness of PTG strategies.

Final Thoughts

“Everyone should have gotten a piece of today’s action – something for everyone!” – PTGDavid
The PTG strategies performed exceptionally well, with both short and long setups working to perfection.
A great example of adapting to market conditions and executing precise trades based on key levels.

Discovery Trading Group Room Preview – Tuesday, February25, 2025

Market Overview
- U.S. stocks attempted a rebound after Friday’s selloff but faced renewed pressure following Trump’s statement that Mexico and Canada tariffs will proceed as planned.
- The Trump administration is considering broader restrictions on U.S. investments in key sectors, including AI, semiconductors, biotechnology, and aerospace, leading to further uncertainty.
- Nvidia’s (NVDA) H20 AI chips are seeing strong demand from Chinese tech giants like Tencent, Alibaba, and ByteDance as they adjust to U.S. export restrictions.
Geopolitics & Policy
- The U.S. stunned allies by withdrawing its UN condemnation of Russia’s 2022 Ukraine invasion, siding with Russia, North Korea, and Belarus. The move is seen as a strategic negotiation effort by Trump to broker a resolution to the conflict.
Bonds & Fed Outlook
- Treasury yields are dropping, with the 10-year yield touching 4.33%, its lowest in two months.
- Markets are now pricing in two Fed rate cuts for 2025, reflecting growing concerns about economic weakness.
Earnings Reports

Premarket: Home Depot (HD), AS, AMT, BMO, CEG, CTRA, FMS, KDP, PNW, PEG, PSA, SBAC, SRE, SNN, BNS, VIK, WDS.
After-Hours: ALC, AXON, CAVA, CPNG, EXR, FSLR, INTU, KEYS, CART, PR, PCVX.

Economic Calendar
- 9:00 AM ET: S&P/CS Composite-20 HPI & HPI
- 10:00 AM ET: CB Consumer Confidence & Richmond Manufacturing Index
- 11:45 AM ET: Fed Governor Michael Barr speaks
- 1:00 PM ET: Richmond Fed President Thomas Barkin speaks
Market Technicals
- ES Futures:
  - The short-term uptrend channel bottom (6049/52s) broke on Monday and now acts as resistance.
  - The intermediate trendline support (5955/58s) is within range for a test.
  - 50-day moving average (6043.25) is turning downward, adding pressure.
  - Key resistance levels: 6151/54s, 6324/29s
  - Key support levels: 6049/52s, 5955/58s, 5670/65s
Volatility remains moderate but elevated, with the ES 5-day ADR at 65.50 points. Large trader volume overnight was light, showing no significant “whale” bias.

ES -Week to Week

The intraday bull/bear line for today is at 6013, marking the key level that separates bullish and bearish intraday sentiment. Holding above this level favors the bulls, while sustained trading below it could shift momentum to the downside.

If the market maintains strength above 6013, the first upside targets are 6017 and then 6041. The upper range target on the day is 6061.

On the downside, failure to stay above 6013 increases the likelihood of testing support at 6000 and then 5994, the key psychological support level. Below that, 5964.5 is the range low target for the day. If that level breaks, it would indicate significant weakness, bringing 5918.75 and 5824.75 into play as deeper downside targets.

The broader bullish structure remains intact, with only a move below 5947 changing the long-term outlook. Traders should watch price action around the key levels to determine directional bias for the session.

NQ – Week to Week

The bull/bear line for NQ is now at 21,496.25, marking the key pivot level for the day. Trading above this level shifts momentum in favor of the bulls, while sustained movement below it invites further selling pressure.

If buyers regain control above 21,496.25, the first upside target is 21,666 followed by 21,700. The range high target for the day is 21,745. Should that break on a range breakout, watch the higher levels like 21,813.

On the downside, failure to hold 21,496.25 opens the door for a test of 21,446. A further breakdown could bring 21,384.75 into play, followed by the next key support at 21,247.25, which is a range low target for the day. If we break that level like yesterday, watch for 21,155, which is the bear/bull longer-term trend trigger. Currently, we are in a swing bearish mode but getting close to swapping that.