S&P 500: The Higher It Goes, The Lower The Volume

on May 21, 2025

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.

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

FREE Two Week Offer for the Opening Print Premium. Open up the Lean and other premium features for the next Two Weeks!

Our View

After an over 20% rally in the S&P, one of the most influential bankers in the world is sending warning signals about the health of the US stock markets.

The ES opened at 5971.00, made a low at 5950.75, and stayed in a 20-point trading range until hen it broke down to the 5927 level just after 3:00. I posted this in the chat:

IMPRO : Dboy : (3:31:52 PM): I think ES trades 5960

ES traded up to 5953 at 3:41, then up to 5961 after the 3:50 imbalance came out at $1.3 billion to sell.

The higher the ES and NQ go, the lower the volumes fall. Yesterday’s total volume was just over 1 million contracts traded.

Out of the Magnificent 7 stocks, only TSLA stood out after Musk commented that he would significantly cut back on his political spending and that he expected to remain head of Tesla five years from now.

Gold futures rose $51.00, settling at $3,284.60, and the U.S. Dollar Index (DXY) closed at 100.36, down 0.07% from the previous close of 100.43. Bitcoin had a slow day, down 0.38%.

IMPRO : BTS : (9:30:02 AM): ES1 Globex Closed @ 5962.00 H:5993.50 L:5955.25 O:5980.00 O₂C: -18.00 (-0.30%) C₂C: -19.25 (-0.32%)
IMPRO : BTS : (9:30:04 AM): Cash Open @ 5962.00, -19.25 (-0.32%) from yesterday’s cash close.

As we all know, there has been a record amount of money moving out of the US to Europe. One of the traders in the MTS chat posted this: “Check out the rest-of-world outperformance YTD — and currency-adjusted is even more.”

Some of these European markets are not only outperforming the ES, they are killing it. The IBX is up almost 24%, the DAX is up 20%, the FTSE is up 18%, and the Hang Seng is up 18%. That is a big spread when you consider the ES is up 1% and the NQ is down about 1% YTD.

Our Lean

There are no scheduled economic releases today, but Richmond Fed President and Fed Governor Michelle Bowman will take part in a Fed Listens event at 12:15:
Fed Listens. With the lack of news, and barring any major headlines, the ES and NQ could see another slow day.

The ES and NQ are overbought and overextended, and the yield on the 30-year bond is trading above 5%. The yield on the 10-year note rose above 4.53%, which is higher than where yields jumped after Moody’s downgraded the US bond market late last Friday. Meanwhile, the GOP is pushing for higher deductions on state and local taxes than what was allowed under the Trump tax bill.

Levels to watch: Use the 5950, which is a Fibonacci 38.2% retracement level from the March 2025 low level as a swing level with initial support at 5925, 5915 (value area), 5900 (the 50-day moving average), and 5880-5875. On the upside, 5965, 5987, 6000.00, 6027 (fib extension) and 6050.00.

Our lean: I can’t rule out buying a lower open or the early weakness, but the downside is riddled with sell stops. If yields remain elevated, I would be looking to sell the rips.

According to AAA, approximately 45.1 million Americans will travel at least 50 miles from home over the Memorial Day holiday weekend, which begins on Thursday, May 22, and ends on Monday, May 26. This represents a record-breaking number of travelers for the holiday, surpassing the previous record set in 2005. The majority of travelers, about 87%, are expected to travel by car, according to AAA.

Thin to win may take over!!!!

Thursday Historically BestDay Before Memorial Day Weekend

From Jeff Hirsch from Stock Trader’s Almanac

The Friday before the long Memorial Day weekend can be a getaway day on The Street, and trading can be lackluster with light volume. Dow has been up 12 times in the last 21 years with an average gain of 0.08%. S&P has a modestly better record, with one additional advance and an average gain of 0.13%. NASDAQ has the best record on Friday, up 15 of 21 and averages a respectable 0.43% gain. Russell 2000 has the fewest advances on Friday, but a still solid 0.31% gain.

Based upon average performance, Thursday has been the best day before Memorial Day with average gains ranging from 0.12% from DJIA to a solid 0.35% by NASDAQ. Frequency of gains is also equal or better on Thursdays, except for NASDAQ. Wednesday has been the softest of the three days with DJIA’s performance turning negative.

MiM and Daily Recap

Tuesday’s ES session opened with downward pressure following a modest premarket high of 5974.50 at 7:30 AM. Selling accelerated into the 9:30 AM regular open, with ES falling to a morning low of 5950.75 by 9:50 AM, shedding 23.75 points (-0.40%). A bounce carried prices up to 5971.00 at 10:40 AM, marking the session’s second lower high before another reversal took hold.

The slide resumed into midday, and the ES reached a low of 5952.75 at 12:10 PM. While this was marginally higher than the earlier low, it failed to shift the tone. Buyers made another attempt and pushed the contract to 5969.00 by 1:10 PM, but once again, sellers stepped back in and drove prices aggressively lower.

The steepest drop of the day came in the 2:00 to 3:00 PM window, bottoming at 5926.75 at 3:00 PM. This represented a 42.25-point decline (-0.71%) from the prior high and marked the session’s low print. From there, the ES rebounded into the 3:50 PM mark, climbing to 5961.00, a 34.25-point (+0.58%) recovery from the bottom.

Despite the rebound, a final pullback followed in the closing stretch, dipping to 5936.00 at 6:10 PM before settling into the close around 5950.50. The day ended modestly lower, reflecting broader consolidation within the ongoing uptrend.

From a cash close to cash close, the ES ended the day at 5959.25, marking a 22-point decline from the previous cash close (-0.37%). The open-to-close change was slightly less negative, with a loss of 2.75 points (-0.05%) from the opening print.

Market Tone & Notable Factors:

Tuesday’s action had a corrective tone, with a consistent pattern of lower highs and a decisive afternoon breakdown that defined the session. Though the contract staged multiple rebounds, each rally attempt met overhead pressure, suggesting rotation rather than trend continuation.

Volume remained within normal bounds, and the market did find late-session liquidity. However, the MiM imbalance at 3:55 PM showed a significant sell-side bias, with -$1.234B in net notional and -63.4% dollar imbalance. The symbol imbalance was also sharply negative at -56.9%. Although the symbol percentage didn’t breach the -66% extreme, the notional pressure clearly favored sellers and likely contributed to the late fade from the 3:50 PM high.

In summary, the day reflected a mild bearish bias with notable weakness in the afternoon. The intraday structure of lower highs and lower lows capped upside conviction, and the MiM imbalance reinforced end-of-day caution. Traders will likely watch for continuation below the 5926 area or signs of stabilization above 5960 in the next session.

How to read the MIM

Technical Edge

Fair Values for May 21, 2025:

SP: 16.68
NQ: 68.25
Dow: 85.73

Daily Market Recap 📊

Tuesday, May 20, 2025

• NYSE Breadth: 41% Upside Volume
• Nasdaq Breadth: 57% Upside Volume
• Total Breadth: 53% Upside Volume
• NYSE Advance/Decline: 40% Advance
• Nasdaq Advance/Decline: 49% Advance
• Total Advance/Decline: 44% Advance
• NYSE New Highs/New Lows: 84 / 15
• Nasdaq New Highs/New Lows: 154 / 55
• NYSE TRIN: 0.80
• Nasdaq TRIN: 0.71

Weekly Market 📈

Week Ending Friday, May 16, 2025

• NYSE Breadth: 64% Upside Volume
• Nasdaq Breadth: 67% Upside Volume
• Total Breadth: 64% Upside Volume
• NYSE Advance/Decline: 76% Advance
• Nasdaq Advance/Decline: 71% Advance
• Total Advance/Decline: 73% Advance
• NYSE New Highs/New Lows: 175 / 63
• Nasdaq New Highs/New Lows: 334 / 266
• NYSE TRIN: 1.76
• Nasdaq TRIN: 1.20

Guest Posts — Polaris Trading Group

Prior Session was Cycle Day 3: Positive 3-Day Cycle as price secured a rally above the CD1 Low (5923) which has an 89.92% historical performance track history.

Positive 3-Day Cycle Statistic is defined as Price Above the Cycle Day 1 Low on Cycle Day 3. P > CD1 on CD3.

It was a “grinder” of a trading day as volatility crush with narrow range, light volumes discouraged traders from actively participating. An orchestrated break of the Initial Balance Low (5950) forced longs to capitulate into the 5930 handle, before the Market Makers (M&M) ripped it right back higher into the closing bell.

Note: Some of the more “dangerous” trading days are like this one…Narrow range, low volume…Just ripe for the pickings for the M&M’s to just screw everyone over…just because they can…Trade Your Plan!

Range for this session was 66 handles on 1.060M contracts exchanged..

For a more detailed recap of the trading session, click on this link: Trading Room RECAP 5.20.25

PTG Glossary

FREE TRIAL link to PTG/Taylor Three Day Cycle

…Transition from Cycle Day 3 to Cycle Day 1

Transition into Cycle Day 1: Today begins a new cycle with the average decline projection measuring 5836.

The current three-week rally remains intact although periods of swing declines to the lower boundary of the uptrend channel, providing savvy BTFD participants to cease the opportunity.

Shorts continue to struggle in the current up swing environment, as bulls are allowing them to push price lower only to “suck them in” and rip it back higher.

According to Goldman Sachs Research: Commodity Trading Advisors (CTAs) Now are Buyers In Every Scenario As Buybacks Accelerate And Bearish Funds Capitulate.

Of course, nothing changes for PTG…Simply follow your plan. Take only Triple A setups and manage the $risk. ALWAYS HAVE HARD STOP-LOSSES in-place on the exchange.

PTG’s Primary Directive (PD) is to ALWAYS STAY IN ALIGNMENT with the DOMINANT FORCE.

As such, scenarios to consider for today’s trading.

Bull Scenario: Price sustains a bid above 5960+-, initially targets 5970 – 5975 zone.

Bear Scenario: Price sustains an offer below 5960+-, initially targets 5950– 5940 zone.

PVA High Edge = 5970 PVA Low Edge = 5950 Prior POC = 5960

ESM

Thanks for reading, PTGDavid

Trading Room Summaries

Polaris Trading Group Summary – Tuesday, May 20, 2025

Tuesday’s session was a textbook example of staying disciplined through tight trading ranges, seizing well-defined opportunities, and embracing patience during summer-style rhythm lulls.

Pre-Market & Opening

Price Action: Overnight activity extended near Briefing’s 5995 target, reaching 5993.50.
Key Levels:
- Line in the Sand: 5975
- Positive 3-Day Cycle marked as satisfied.
Market Tone: Neutral-to-slightly-bearish at open; bulls needed sustained bids above 5965–5975 to shift control.

Morning Action

PTGDavid laid out a Bear Scenario early:
- If price sustained offers below 5975, target 5950–5940.
- Result: 5950 tagged swiftly after the 10:03 AM setup—clean execution of plan.
- Community recognition: “TYVM!” and shared appreciation showed alignment.

Midday

The market settled into a tight, choppy range — “The Chop is Real” as David noted with charts.
Barbara Lopez earned the “Kewpie Award” with an early observation of “return to the mean” that proved accurate.
David advised: “Do Not Push on the String,” cautioning against forcing trades in compressed ranges.

Afternoon & Late Session

Post-lunch, with little changed, David humorously referenced playing 9 holes of golf—emphasizing the importance of not overtrading dull conditions.
2:22 PM: Bearish plan reiterated, targeting 5950–5940, which was successfully fulfilled.
- A sweep of sell stops confirmed the move.
- 5940 achieved at 2:31 PM, followed by discussion of momentum players chasing late.
Extended Bear Projection: CD1 target noted at 5918, though not reached today.
Decision Point: 5940 also marked a 50% retracement of the prior session—offering valuable context.
Late Session Movement: Recovered toward VWAP (“Romulan Neutral Zone”), showing signs of balance.
Market-on-close flow: ~$1B for sale.

Key Takeaways

Disciplined execution of bear scenario with clean hits on 5950 and 5940.
Emphasis on letting the market come to your levels — not chasing.
Patience rewarded—traders who avoided chop and waited for well-defined breaks benefited most.
Some expected decline is now “in-place”; tomorrow begins a new cycle day, setting the stage for potential fresh opportunities.

Lesson of the Day: Stay sharp in range-bound markets, respect your levels, and remember—sometimes the best trade is no trade until rhythm returns.

Discovery Trading Group Room Preview – Wednesday, May 21, 2025

Market Pullback: The S&P 500 ended a six-day winning streak, now within 3% of its all-time high.
Tariff Concerns: Fed officials highlight risks:
- St. Louis Fed’s Musalem remains cautious post 90-day tariff truce.
- Atlanta Fed’s Bostic warns of potential price hikes from tariffs.
Rising Yields:
- 30-year Treasury briefly exceeded 5% on Monday, highest since 2023.
- Yields climbed again Tuesday amid fiscal concerns.
Debt & Policy:
- Citi sees narrowing fiscal space.
- Trump’s proposed tax cuts could raise the debt ceiling by $4 trillion.
Earnings Focus:
- Premarket: Lowe’s (LOW), Target (TGT), TJX (TJX), Medtronic (MDT), others.
- After hours: Snowflake (SNOW), Zoom (ZM).
Economic Calendar: Light; key release is Crude Oil Inventories at 10:30am ET.
Market Technicals:
- ES remains above 200-day MA (5882.75), below short-term uptrend channel.
- Volatility contracting – ES 5-day average daily range now 65.75 points.
- No notable overnight large trader (whale) activity.

ES

The bull/bear line for the ES is at 5956.50. This is the critical pivot level that will determine the directional bias for today’s session. Currently, ES is trading well below this level at 5920.50, indicating that the bears are in control heading into the open.

If ES continues to hold below 5956.50, we expect continued downside pressure with initial support at 5926.75. A break below this level opens the door to test the lower range target at 5906.50. Should selling intensify, further support lies at 5871.25, which is the moving average, followed by the s1 support at 5859.50.

On the upside, bulls will need to reclaim and sustain trade above 5956.50 to regain control. Above that, initial resistance comes in at 5980.00 and then the upper range target at 6006.50. A further rally could see price testing the 6053.25 level.

The intraday tone remains bearish while below 5956.50. Expect sell-the-rip conditions unless bulls can reclaim this key pivot decisively.

The bull/bear line for the NQ is at 21,424.00. This is the pivotal level to gauge directional bias. The current price is trading below this level, around 21,312.50, indicating a bearish stance to start the session. As long as price remains below 21,424.00, sellers are in control.

If the downside continues, the first level of resistance is 21,298.00, marking the overnight low. A break below this area brings the lower range target of 21,215.75 into focus. Below that, support comes in at 21,019.50, with further downside pressure potentially reaching toward 20,685.75, aligning with the moving average, and then 20,615.00, the s2r level.

On the upside, if bulls can regain control and reclaim 21,424.00, a move toward 21,513.00 becomes possible. Further strength could target 21,632.50, which is the upper range target for the day. Strong continuation buying would be needed to test the higher resistance at 21,828.50.

The current opening formation is neutral-to-bearish. Watch for confirmation either below 21,298.00 or a reclaim above 21,424.00 to guide the intraday plan.