by Danny Riley

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The S&P And The Art Of The Deal

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Our View

When you have 530,000 ES contracts traded on Globex and the markets are down hard, it means one thing: everyone sold, and most of the selling was done at low prices. Then, the headline news algos did the heavy lifting. These algos feed off extreme overbought and oversold conditions and they took the ball and ran with it. They care about the nearby buy and sell stops and after a small rally after the open, the NQ started getting hit and the ES sold off down to a new low of 5950.25, just above the Globex low of 5935.50. Shortly after, several key headlines hit:

MEXICAN PRESIDENT SHEINBAUM SAYS HAD A GOOD CONVERSATION WITH TRUMP

MEXICAN PRESIDENT SHEINBAUM SAYS MEXICO WILL DEPLOY 10,000 NATIONAL GUARD IMMEDIATELY TO BORDER TO AVOID TRAFFICKING OF DRUGS TO U.S.

MEXICO’S SHEINBAUM SAYS TARIFFS DELAYED FOR A MONTH

I hate to say it, but this is how this game is played, too long, too short. After several pullbacks and pops, the ES continued trading higher and then dropped down to the 6048 level just before the MIM showed $2.7 billion to sell and then rallied up to a new high of 6069.00.

Meanwhile, Trump agreed to delay the tariffs he had placed on Canada and announced upcoming discussions with both leaders and China is also preparing to talk with Trump.

Our Lean

Sorry, I would have done more with the View, but my charts are acting up. My cousin Bobby called me to complain about Trump and started talking about the rally in the ES. I told him we would tally 100 points, and he said it was all headlines that did the push. To me, it doesn’t matter how you get from A to B, it’s that you get there. I had a feeling the market had gone down too fast, and yes, the headlines were a big part of it, but I stated my case in yesterday’s Lean and put out 6044 to 6060. The high was 6069. Like I said, it doesn’t matter how you get there, what counts is that you get there.

Today, we have factory orders, job openings, and three Fed speakers.

Our lean: Eventually, the ES is going to a new high, but not today. I think if the ES gaps higher, we could see a pullback, and if we gap lower, I think we rally, but not like yesterday. If you’re a bull, what you’re looking for is some “back and fill,” but you still have to be on guard for more headlines. I see a two-way trade with an upward bias, but be careful and use stops.

MiM and Daily Recap

Yesterday’s ES session began with a sluggish tone in the overnight session, dipping early before finding a base and launching into a steady climb. The Globex session opened at 5982.25 and made an early high at 5988.75 before rolling over to test lower levels. The first significant low of the session came at 07:57 with a print at 5960.25, marking a drop of 27.75 points, a 0.46% decline. Buyers stepped in, pushing the market higher into an early morning peak at 08:06, where ES reached 5983.00 before rolling over once more.

Heading into the regular trading session, the market initially weakened. The first major push lower occurred at 10:18, with ES printing its lowest level of the morning at 5950.25, marking a 39.25-point drop (-0.66%) from the previous peak. That decline was met with strong buying interest, kicking off a sharp rally that took ES to 6013.25 by 11:03. The upward momentum continued, reaching 6032.75 by 11:00, then a session high of 6038.50 at 11:21, a gain of 82.50 points (1.39%) from the session low.

After the morning strength, the market briefly stalled before pulling back to 6012.50 at 12:06, shaving off 26.00 points (-0.43%). It rebounded to 6033.00 by 12:24, then dipped again to 6003.75 at 12:54, marking a 29.25-point decline (-0.48%). The recovery was slow but persistent, as buyers eventually took control and pushed ES into a late-day rally.

By 14:48, ES had surged to its final peak of the session at 6049.25, a 45.50-point gain (0.76%). A pullback into the closing hour saw the index drift lower again, finding support at 6020.00 by 15:57.

The closing print was a key factor in assessing the session’s outcome. The regular session finished at 6023.00, up 50.75 points or 0.85% from the open. The cleanup print pushed even higher to 6055.50, marking a net gain of 73.25 points (+1.22%) on the day open to close. Cash close to close ES was down 41.75 or -0.7%.

One notable aspect of the session was the Market On Close (MOC) imbalance, which leaned heavily to the sell side. The final imbalance stood at -2.8B, with 72.9% of the flow on the sell side, suggesting institutional liquidation into the close. The symbol imbalance also leaned bearish at -54.6%. The heavy selling pressure into the close kept the late afternoon gains from extending much further, capping what had otherwise been a strong upside recovery..

In the end Trump’s aggressive move to place tariffs on hundreds of billions of dollars in imports shook the market, economists and some lawmakers. In terms of the ES’s overall tone the ES was firm. In terms of the ES’s overall trade, volume was high at 2.2 million contracts traded. The 10-year note yield was down 3 basis points at 4.535%, and after falling to $91,212.63 Bitcoin reversed its losses to close at $101,241.37, up over 3%.

How to read the MIM

Technical Edge

MrTopStep Levels:

How to read MTS Levels

Fair Values for February 4, 2025:

SP: 25.63
NQ: 103.08
Dow: 137.03

Daily Market Recap 📊

NYSE Breadth: 31% Upside Volume
Nasdaq Breadth: 47% Upside Volume
Total Breadth: 45% Upside Volume
NYSE Advance/Decline: 32% Advance
Nasdaq Advance/Decline: 30% Advance
Total Advance/Decline: 30% Advance
NYSE New Highs/New Lows: 38 / 99
Nasdaq New Highs/New Lows: 65 / 234
NYSE TRIN: 0.98
Nasdaq TRIN: 0.47

Weekly Market 📈

NYSE Breadth: 48% Upside Volume
Nasdaq Breadth: 51% Upside Volume
Total Breadth: 50% Upside Volume
NYSE Advance/Decline: 47% Advance
Nasdaq Advance/Decline: 41% Advance
Total Advance/Decline: 43% Advance
NYSE New Highs/New Lows: 253 / 74
Nasdaq New Highs/New Lows: 334 / 342
NYSE TRIN: 1.07
Nasdaq TRIN: 0.94

Trading Room Summaries

Polaris Trading Group Summary for Monday, February 32025

Morning Session: Cautious Start and Key Levels Met

The session opened with @NQ tagging the Cycle Day 1 projected average decline at 20,959, leading to a reversal.
Crude Oil (@CL) met its OPR short target, marking an early win.
Market action was choppy, with multiple reactions around key levels (notably 310).
Slow drip lower developed mid-morning, with a watchful eye on the ONL retest.
Fast-moving conditions were expected, and David emphasized the importance of hard stops.

Midday: Consolidation and Cycle Statistics Secured

@NQ reclaimed its CD1 low (21,419.50), confirming a positive 3-day cycle statistic.
@ES, however, was still struggling to reclaim its CD1 low (6,056.50).
Lunch period was quiet, with David advising traders to stand aside unless they enjoyed getting “run over.”

Afternoon: Bulls Maintain Control, But ES Lagged

Post-lunch shakeout (“Shake n’ Bake”) saw bulls maintaining control, but @ES still shy of reclaiming CD1 low—the afternoon’s target.
Bulls pushed for a Friday gap fill, but late-day selling and a $2.7 billion MOC sell imbalance kept @ES from fully recovering.
Final hour saw selling pressure, leading to no gap fill and @ES failing to reclaim CD1 low.

End of Day: Gaps Filled Thanks to Breaking News

News broke that Trump and Trudeau secured the Canadian border, pausing tariffs for 30 days while Canada implements new border security measures.
This news led to @ES and @NQ gap fills, securing the positive 3-day cycle statistic.
David celebrated the market response and shared political insights on border security developments.

Key Takeaways & Lessons Learned

✅ Patience paid off – Early reversals at key levels set up the day’s best trades.
✅ Cycle statistics continue to be a valuable guide, as seen with the NQ reclaim.
✅ Fast-moving markets demand discipline – Hard stops were essential.
✅ News catalysts can drive late-session moves – Traders adapted as geopolitical developments influenced price action.

Another solid trading day with opportunities on both sides, but @ES failing to reclaim CD1 low showed some weakness.

Discovery Trading Group Room Preview – Tuesday, February 4, 2025

Morning Market Brief:
- Trade & Tariff Developments:
  - Trump has paused tariffs on Mexico and Canada for one month after discussions with their presidents, citing progress on border security.
  - He is set to speak with China’s President Xi Jinping this week as 10% tariffs on Chinese imports begin today. Apple (AAPL) faces a significant impact, with Trump considering 60% tariffs, which could drive consumers to hold onto older Apple devices.
  - China retaliated overnight with tariffs on U.S. coal (15%), crude oil, farm equipment, and autos (10%), and launched an anti-monopoly probe into Alphabet (GOOG, GOOGL). Additionally, PVH Corp (Calvin Klein) and biotech firm Illumina (ILMN) were placed on China’s “unreliable entities list.”
  - China also announced export controls on critical rare earths—tungsten, tellurium, molybdenum, bismuth, and indium—impacting clean energy technology supply chains.
  Fed & Market Sentiment:
  - Chicago Fed President Austan Goolsbee signaled that the Fed might slow interest rate adjustments due to trade war uncertainties. He emphasized concerns from businesses about inflation risks and geopolitical instability.
  - Volatility declined on Monday, with ES 5-day average daily range at 86.50 points. However, whale bias is bearish into today’s U.S. session.
  Corporate Earnings & Key Reports:
  - Palantir Technologies (PLTR) surged 22% post-market on bullish fiscal 2025 guidance. The company discouraged AI model usage from Chinese firm DeepSeek, citing security risks.
  - Key earnings releases before market open: BP, PepsiCo (PEP), Pfizer (PFE), Toyota (TM), among others.
  - Earnings after the bell: AMD, Alphabet (GOOG, GOOGL), Amgen (AMGN), Chipotle (CMG), Electronic Arts (EA), Snap (SNAP), and more.
  - Economic Data Today:
    - JOLTS Job Openings & Factory Orders @ 10:00 AM ET
    - Fed Speakers: Bostic @ 11:00 AM ET, Daly @ 2:00 PM ET
  Technical Levels to Watch (ES Futures):
  - Resistance Levels: 6248/53, 6443/48
  - Support Levels: 5916/13, 5907/10, 5715/10
  - The ES bounced to the middle of its short-term uptrend channel, with the 50-day MA (6051) acting as resistance.
  Markets remain on edge with trade tensions escalating. Keep an eye on tariff talks, Fed commentary, and earnings reports for directional cues. 🚨📈

ES -Week to Week

The intraday bull/bear line is now at 6012, marking the pivotal level for today’s trading. A sustained move above this level signals a bullish continuation, whereas failure to hold above it may lead to further downside pressure.

For the bullish scenario, the next key resistance levels to monitor are 6071.8 and 6143.75. A breakout above these levels could open the door to further highs.

On the downside, staying below 6012 increases the likelihood of testing support levels at 5982.25 and 5950. A deeper pullback may see price action targeting the critical level at 5935.

Given the recent price movement, a retest of 6005 will be crucial in determining the direction of the next leg.

NQ – Week to Week

The long-term bull/bear line remains at 22,073, serving as the critical threshold for a broader shift in momentum. While the market continues to trade below this level, any sustained push higher will require strength above key intraday levels.

For today, the intraday bull/bear line sits at 21,347, marking the dividing line between bullish and bearish sentiment. If buyers can hold above this level, they will have a chance to push toward 21,572, the average resistance for the day. From there, the next challenge lies at 21,641, the upper resistance of the day’s range. Should momentum build beyond these levels, 21,822 comes into play as the upper Bollinger Band target, a key area where sellers may attempt to regain control.

On the downside, weakness below 21,347 puts 21,200, the previous open, into focus. Losing this level could invite more selling pressure, driving the market down toward 21,033, the lower resistance of today’s range. Further downside could see a test of 20,777.25, a deeper support level that, if reached, would indicate a significant shift in sentiment.

With price sitting at a pivotal juncture, the market’s reaction to 21,347 will be the key tell for direction. Holding above it supports the case for buyers, while a failure to maintain ground there opens the door for further declines. Volatility remains in play, and traders should stay aware of these key inflection points as the session unfolds.