You can like Trump or hate him; it doesn’t matter because he is never going to change his antics. Just because the markets have rallied doesn’t mean the worst is over, nor does it mean Trump is going to be more predictable.

The point is that it’s not just the on-again, off-again US-Iran negotiations. Iran seized the Hui Chuan, a support vessel owned by Chinese firm Sinoguards Marine Security, near the Strait of Hormuz on Thursday. Additionally, the 30-year mortgage rate rose to 6.51%, its highest level since August; the US charged Cuba’s former president Raúl Castro with murder; and House Republican leaders yanked a planned vote to restrict President Trump’s ability to conduct military strikes against Iran.

Last but not least, progress in Iran talks was undercut over uranium and Hormuz tolls, the inflation rate hit its highest level in three years, and the Fed minutes suggest rate hikes by the end of the year are firmly on the table.

I would like to say this is all temporary, but I don’t think it is. In fact, I think this is just the tip of the iceberg and that the “pain game” has just begun.

To say we live in interesting times is an understatement. It’s 9:42 pm Thursday, and the ES made a 7486.75 high and is trading 7465.75, up 14 points or +0.19%.

After a 3-day decline, the ES has bounced back and is now only 74.25 points off its all-time high. Meanwhile, bond futures are trading at 111.02, up 6 points from their 109.26 low on 5/16/26, and the dollar index (DXY) is trading unchanged at 99.26.

At 10:00 am today, we have the Leading Indicators and the U. Michigan Final Consumer Survey. We also have the Week 4 May weekly options expiration, which carries a short-term bias that is mildly bullish to neutral with a strong tendency toward pinning.

The SPX closed Thursday near 7446 in a broader uptrend, comfortably above the max pain zone of 7400–7430, which typically supports mild upside or stabilization into expiration. The expected move is relatively tight at around ±0.6% / ±45 points, while positive gamma from short-dated options favors reduced volatility and a potential grind higher rather than sharp drops.

Overall market sentiment remains bullish, though a break below 7400–7410 could trigger amplified selling if geopolitical or economic surprises arise.

That’s all fine and dandy, but the main show will remain the continued US-Iran headlines. I said yesterday that the 7475–7480 area could provide resistance, and I still feel that way.

While I think the ES and NQ can still grind higher, I also think it is important to keep an eye on the 10-year note, 30-year bond, and crude oil. I don’t want to get overly comfortable, but if the ES can clear and hold above 7480, I think we could see 7500–7520.

I understand these are tight objectives, but there is always some whipsaw to contend with.

Our lean: I can’t rule out selling an early rip, but buying the pullbacks remains the preferred trade.

AI ES Primary Market Profile Condition

The last 10-session composite profile is transitioning from a balanced D-shaped profile into a developing P-shaped profile after the aggressive rebound from the 7223–7240 accumulation zone.

Buyers successfully defended lower value and forced value migrtion higher above:

• 7420

• 7452

• 7466 - settlement acceptance

This indicates:

• Responsive buyers remain active

• Higher value is being accepted

• Market remains rotational unless 7488-7500 breaks with initiative volume

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Founder's Note:

PM Note

The stock market bounced off session lows and closed modestly higher following the Iran headline, while crude oil continued to decline.

SPX traded within a 102 bps range and closed at 7,445 (+0.17%). Our Risk Pivot at 7,390 held well during the session, reinforcing the continuation of bullish momentum. VIX fell 0.7 points to ~16.8, while VVIX moved toward the lower end of its yearly range.

Put selling activity added positive gamma below 7,400, which served as support throughout the session.

S&P 500 HIRO flow finished at -$1.5B delta for the day. Notably, 0DTE call selling (green line) and 0DTE put buying (light blue line) dominated the flow.

On the S&P Equities HIRO side, we saw approximately +$1B of delta flow, driven primarily by call buying and put selling. Overall positioning appeared moderate and tactical, reflecting the short-tenor nature of the activity, with net flow remaining relatively light.

Fixed Strike Volatility moved lower by 0.3.0–1.5 vol points across the surface. Vol sellers stepped in to compress risk premium following the Iran headline, and the resulting vanna-related hedging flows provided an additional tailwind for equities.

For single stocks, Nvidia (NVDA) closed at 220 (-1.77%) on the day. The 200–220 positive gamma pocket discussed in yesterday’s AM Note held well during the session.

At higher strikes, dealer gamma remains negative between 235 and 250 for this week’s NVDA expiration. That negative gamma positioning rolls off after Friday, potentially returning dealer positioning to a more directionally neutral state.

FlowPatrol winner of the day is AAOI (Applied Optoelectronics). In Tuesday’s FlowPatrol, we highlighted approximately 1,900 contracts of AAOI June 2028 250 Calls bought to open with 22 million premium paid. Despite weakness earlier this week, AAOI bounced from the 160 Put Wall level. 

Today, AAOI rose 7% and closed at 177, and those calls gained approximately 10% (still having nearly two years until expiration). We would continue monitoring this setup, as there still appears to be room toward the 200 Call Wall.

Notable flows of the day:

IWM: We saw 66k contracts of June 5 $272 puts trade for $2.27, with 15 million premium paid. The execution price is above the ask, signaling potential buying. Given that IWM (small-cap ETF) tends to be more sensitive to rates, this flow may represent hedging activity ahead of the May 28 PCE data release.

ES Levels

The bull/bear line for the ES is at 7458.50. This remains the key pivot for today’s session. As long as price holds above this level, buyers maintain near-term control and dips into support may continue to attract responsive buying.

ES is currently trading around 7482.75 after rebounding sharply from the 7399.25 support zone earlier in the week. Momentum has improved considerably with buyers reclaiming both the 7432.75 support shelf and the 7466.00 pivot. Holding above 7466.00 keeps the short-term structure constructive and opens the door for a continuation higher into 7486.75 and then the upper range target at 7517.75.

If bulls can sustain acceptance above 7486.75, the market could extend toward 7573.50, which is the next major upside resistance and breakout objective. This area is likely to attract profit taking and heavier two-way trade if reached during regular hours.

On the downside, initial support comes in at 7466.00 followed by the bull/bear line at 7458.50. A loss of 7458.50 would weaken the current recovery structure and likely rotate price back toward 7432.75. Below that, 7407.50 and the lower range target at 7399.25 become important downside objectives. If sellers regain control under 7399.25, the market could accelerate toward 7343.50.

Overall, the near-term tone remains bullish while ES holds above 7458.50. Buyers have regained momentum after defending the lower range lows, but they still need a clean breakout above 7486.75 to trigger a larger move toward 7517.75 and potentially 7573.50.

NQ Levels

The bull/bear line for the NQ is at 29401.75. This remains the key pivot for today’s session and continues to define the short-term directional bias. As long as NQ holds above this level, buyers maintain near-term control and dips into this zone may attract support.

NQ is currently trading around 29517.50 after extending higher during the overnight Globex session. The market is now pushing toward resistance at 29554.00, which marks the overnight high. A sustained move above 29554.00 opens the door for continuation higher into 29771.00, the upper intraday range target. Beyond that, resistance expands toward 30118.50, which would represent a major upside extension if momentum accelerates.

On the downside, initial support comes in at 29253.00 followed by 29113.00. If sellers regain control and push price back below the bull/bear line at 29401.75, downside pressure could increase toward 29032.50, the lower intraday range target. A break beneath that level could expose deeper liquidation toward 28685.00.

Overall, the short-term trend remains constructive while NQ holds above 29401.75. Bulls currently have momentum following the strong overnight recovery, but price is approaching important resistance overhead near 29554.00. Traders should watch for acceptance above that level to confirm continuation toward the upper target zone at 29771.00.

Polaris Trading Group Summary - For Thursday, May 21, 2026

Thursday’s session was a great example of patience and adaptability paying off. The morning opened rotational and somewhat sloppy, but traders who stayed disciplined and followed David’s evolving bias were rewarded later in the day with a very strong DLMB setup and solid afternoon opportunities. The room maintained a positive, educational tone throughout, with good interaction between newer and experienced members.

Opening Market Tone

• David opened the session with:

  • “Neutral to start... slight down lean”

• Early market action was choppy and lacked clean direction.

• Discussion centered around:

  • Open Range behavior

  • Market structure

  • “Uninformed trader” concepts

  • Gamma/volatility levels

Important Bias Shift

• David later announced:

  • “Shift to long lean now”

• This became an important transition point as the market evolved away from the earlier weakness.

• Reinforced the importance of:

  • Staying flexible

  • Avoiding stubborn directional bias

  • Letting structure confirm the trade

Key Educational Themes

• “Cycle day 2 MATD rhythms” discussed during the session.

• Traders focused on:

  • Market cycles

  • Volatility triggers

  • Structural context over emotional trading

• The room emphasized waiting for quality setups rather than forcing trades during poor structure.

Morning Conditions

• Several traders noted the market profile looked difficult:

  • “Ugly profile right now”

• David stayed patient and continued guiding members through the conditions instead of overtrading.

Headline / News Impact

• Midday geopolitical headline shared:

  • Possible US-Iran draft agreement via Pakistan mediation.

• Helped explain some shifting sentiment during the afternoon.

Trade of the Day – DLMB

• David alerted:

  • “DLMB in-play”

• Shortly after:

  • “DLMB hit beautifully”

• This became the standout move of the session.

Late Day Context

• David later noted:

  • “Buy Imbalance $2.2 Billion”

• Confirmed strong late-session buying pressure and supported the bullish afternoon tone.

Lessons Learned

• Not every good trading day starts with clean price action.

• Patience through rotational conditions matters.

• Bias can and should evolve with market structure.

• Strong setups often appear later in the session.

• The DLMB setup reinforced the importance of:

  • Discipline

  • Timing

  • Following confirmed structure instead of anticipation

DTG Room Preview – Friday, May 22, 2026

• Macro focus: 10:00am ET UoM Sentiment/Inflation Expectations, CB Leading Index, and Fed’s Waller.

• Geopolitical: US/Iran optimism faded after Iran uranium/Hormuz headlines; oil is rising again and the dollar is near 6-week highs.

• Positioning: Whale bias is bearish into the US open on light overnight large-trader volume.

• Volatility: ES 5-day ADR remains elevated at 93.50 pts.

• Levels: ES is holding key uptrend support at 7383/88s; break/clear below flips short-term trend down.

• Resistance: 7531/36s, then 7813/18s.

• Support: 7383/88s, then 7288/93s.