Well, well… the ES and NQ rose sharply on Monday as they recovered some of their losses from last Friday’s plunge. I could do a big play-by-play, but the futures index markets went from the end of the world to gapping +1% higher and rallying all the way up to 6711.50 just after 2:00 p.m.

After the high, the ES pulled back to the 6688 level, rallied up to a higher low at 6707.50, pulled back to 6681.50 at 3:50, rallied up to 6700.75 at 3:54 after the imbalance showed $1.8 billion to buy, and then it started to slide. The ES traded 6694.75 on the 5:00 cash close, up 99.5 points or +1.51%.

The NQ settled at 24,922.25, up 525.25 points or +2.15%, and the YM (Dow future) settled at 46,298.00, up 592 points or 1.30% on the day.

In the end, it’s hard not to think the Trump Friday headlines were a setup. I read something that said retail was either long a call, long a stock, or a futures contract—and they all lost. The longs got whacked, and the shorts got whacked too.

But after all the Trump rhetoric, the chip-makers and AI infrastructure stocks rallied after OpenAI signed a multi-year agreement with Broadcom to collaborate on custom chips and networking equipment, which could add 10 gigawatts worth of AI data center capacity.

In terms of the ES and NQ’s overall tone, they were firm all day. In terms of the ES’s overall trade, Friday’s volume was 2.57 million and Monday’s volume was lower at 1.721 million contracts traded.

I’m not sure Trump’s Art of the Deal is working, and neither is China. For the last 10 months, Trump has pushed every nation that does business with the US up, down, and all around with his threats and retreats. Anytime Trump acts up, there is a sharp increase in volatility. I don’t know how this is going to end up, but it doesn’t look very promising—and Mike Wilson from Morgan Stanley agrees.

Wilson, Morgan Stanley’s Chief U.S. Equity Strategist, warned on Monday that escalating U.S.-China trade tensions could drive a 10–15% S&P 500 correction (to 5,800–6,027 from 6,553) if unresolved by November 1. Friday’s selloff—triggered by China’s tightened rare earth export controls and Trump’s 100% tariff threat—erased $1.50T from the S&P 500 (3% drop) and $1.46T from the Nasdaq (3.6% drop). Wilson cites stretched valuations (S&P forward P/E ~22x), overcrowded bullish positioning, and seasonal weakness as setting up an “overdue” correction—amplified by weak global dollar liquidity and potential earnings downgrades.

Sector Risks: Semiconductors, quantum computing, and consumer discretionary face the highest exposure to supply chain disruptions and tariff costs. Wilson recommends overweighting defensive sectors like healthcare and “quality” factors.

Bull Case: He maintains the bull market, sparked by April 2025’s earnings recovery, is “early-cycle,” not late, with low recession risk. De-escalation (e.g., China easing curbs, U.S. moderating tariffs) could resume the rally, as seen Monday when markets rebounded (S&P +1.5% to ~6,680, Nasdaq +2.7% to ~22,800) after Trump softened his stance. Investors should trim cyclicals, add defensives, and monitor November 1 deadlines and technical levels (e.g., 50-day MA).

I’m not sure Mike Wilson knew that the S&P would be up 1.5% after he posted his report, but I don’t think that really matters. The point is: if the US and China can’t strike a deal, I think there could be a large drop.

Trump announced the 90-day pause on reciprocal tariffs on April 9th. The low was 4948.50 and rallied up to 5604.75, up 12.88%—the largest intraday point swing since 1967 for the S&P 500 index. That type of move would be in line with what Mike Wilson is looking for, basically a complete retracement of the April lows.

To summarize, we all know how unpredictable Trump is. Sometimes it works and sometimes it doesn’t—but mistakes of this scale could set off a domino effect. Only time will tell.

Our View

If there’s one main concern for me right now, it’s that our elected officials pass a budget deal. But based on the 20% to 25% odds, it seems unlikely. Today is the 14th day of the shutdown, and the prior shutdown during the Obama administration went 16 days—October 1–17, 2013, due to the Affordable Care Act funding.

During that 16-day U.S. government shutdown, the S&P 500 gained approximately 3.1% (from 1,681.55 to ~1,733.15) over 13 trading days. Despite early volatility and a dip around October 8–9 due to debt ceiling concerns, the index rallied to an all-time high by October 17 as Congress passed a deal to reopen the government and raise the debt ceiling.

I think the S&P will rally when a budget deal is passed, but what I’m worried about is the “data blackout.” At least 10 major reports have been delayed or canceled since October 1. That includes jobs, inflation, and trade metrics. It only exacerbates uncertainty for the Fed’s October 28–29 meeting, and just four days later is the November 1 tariff deadline.

I think this will be an extremely volatile period and a date you should mark on your calendar.

US-China Trade War: Maritime Escalation

Our Lean

I was long late in the day and got out at a scratch. The ES just traded up to 6718.50 on Globex. That’s 178.25 points off the 6540.25 low from Friday.

Our lean: While I don’t think the rally is over, MrTopStep has a trading rule that says the ES tends to go sideways to down after a big up day. If the ES gaps up 20 to 30 points, I am selling the open or the early rallies—and vice versa on a gap-down open. If the ES gaps up and starts to break, it could set the early tone. Be patient and wait for a low to get long from.

As for support levels:
6695.00, 6687–6685, 6680, 6675, 6667, 6659, (6653, 6649, 6645 – key support), 6633, 6620, 6608, 6595, 6589.
On the upside:
6720, 6728, 6740, 6753, 6774, 6780.

USE stops, don’t let losses run.

ES & NQ Levels (Premium only)

ES – Z Levels

The bull/bear line for the ES is at 6685.50. This is the key pivot level that defines the tone for today’s trade. Above 6685.50, buyers may try to build momentum and reclaim the upper balance area. Below it, the tone remains defensive and sellers maintain control.

Currently, ES is trading around 6613.00, well below the bull/bear line, signaling continued weakness. The intraday bias remains bearish unless price can reclaim and hold above 6685.50.

The upper range target is 6761.50. A move back above 6685.50 could open the door toward 6694.75 and 6711.50, with 6761.50 as the upside objective. Sustained trade above that zone could test 6833.00, the next resistance level.

On the downside, the lower range target is 6609.00. Below that, the next support sits at 6538.00 and then 6533.75 as the deeper downside extension.

Overall, the trend remains bearish while below 6685.50. Bulls need a recovery through that level to stabilize the tape. A break below 6609.50 would likely extend the move toward 6538.00.

NQ – Z – Levels

The bull/bear line for the NQ is at 24,854.75. This is the key pivot (wPv) level that defines sentiment for today’s session. Trading below this level favors continued weakness, while reclaiming and holding above it would shift momentum back to the upside.

Currently, NQ is trading around 24,523.25, well below the bull/bear line, confirming a bearish tone in the early Globex session. If the sellers remain in control below 24,854.75, the next downside targets are 24,476.75 (lower range target) and 24,120.75. A breakdown below 24,120.75 could open the door to a retest of 23,966.25.

On the upside, initial resistance sits at 24,922.25 and 24,965. A move above 24,965 would target 25,232.75 (upper range target) and then 25,588.75 if buyers can sustain momentum. A push through 25,588.75 could extend to the 25,661.50 region.

In summary, the trend bias remains bearish while NQ holds below 24,854.75. Short-term rallies into resistance zones may offer selling opportunities until that pivot is reclaimed. A sustained move back above 24,854.75 would neutralize the downside and potentially trigger a broader recovery leg toward 25,232.75 and higher.

Polaris Trading Group Summary – Monday, October 13, 2025

Monday brought a classic Cycle Day 2 with wide MATD (Morning After Trend Day) rhythms that presented multiple solid trade opportunities, especially for those patient with dip buys. Market action was choppy at times with alternating control between bulls and bears, but ultimately a bullish tone persisted into the close, capped off by a strong $1.8B MOC (Market On Close) buy.

Key Trades & Highlights:

Lessons & Takeaways:

Overall Room Performance:

A positive day for disciplined traders. Multiple solid long setups (especially around the AM low and A10) rewarded those sticking with structure. Despite volatility, the room maintained good energy, focus, and a steady flow of educational insights from both David and Manny.