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Big Gap, Big Week, Big Decisions
Danny Riley
May 12, 2025
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Our View
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What can I say? The ES and NQ have gone up, but will they keep going up? The ES made a high at 5710.00 on Friday, sold off down to 5662.50 during the session, and popped back up to 5684 at the 5:00 futures close. I don’t think there’s much to say that we haven’t already covered. It’s been three months of vicious moves and, like I said back then, it’s not going to stop. Everything is changing so fast, it’s hard to gauge where things are going.
After a big sell-off, TSLA has now closed higher three straight weeks in a row, and investors are taking a deep breath as the U.S. and China meet in Geneva for tariff talks, which appeared to pay off.
This week we have 17 economic reports, 10 of which include retail sales and PPI. Powell is scheduled to speak on Thursday. Earnings reports include Cisco Systems (CSCO), Applied Materials (AMAT), Baidu (BIDU), Lithium Americas (LAC), among others.
Overall, 90% of companies in the S&P 500 have reported actual results for Q1 2025. Of these, 78% have reported EPS above estimates, higher than the five-year average of 77% and the ten-year average of 75%.
Where is the S&P? Friday’s close for the index was 5659.910, down about 20 points from the previous week’s close but a significant 17% rally from its April 7 low. The technical outlook remains bullish, with the index nearing its 200-day SMA resistance at 5748, and market breadth improving to 44.40% from 37.80%.
Q1 2025 earnings have been strong, with 12.8% growth and 76% positive EPS surprises, which I think has helped support the performance in the index markets. ES support should be monitored at 5600 and resistance at 5700, taking into account both technical factors and macro developments like the tariff negotiations.
As the U.S. and China press forward with talks, discussion about delisting Chinese stocks from U.S. exchanges has resurfaced. Trump first raised the issue in late February, and while the administration has been on the down low, the discussion has come up again. There are currently 286 Chinese-listed companies on U.S. exchanges with a total market capitalization of $1.1 trillion.
Our Lean
Support Levels:
1st Support Level: 5655.25
2nd Support Level: 5632.50
3rd Support Level: 5602.50
Resistance Levels:
1st Resistance Point: 5708.00
2nd Resistance Point: 5738.00
3rd Resistance Point: 5760.70
4th Resistance Point: 5776.00
Fibonacci Levels:
61.8%: 5699.99
50%: 5533.88
38.2%: 5367.76
52-Week Range:
High: 6237.75
Low: 4830.00
Few know this, but before I went to the S&P, I was an arbitrage clerk in the CME’s gold pit. In December 1979, gold was trading around $500.00 and made a high in April at 3,485.60. Last week, a JP Morgan analyst estimated that gold could reach $6,000 per ounce by 2029—an 80% increase. Gold has outperformed the U.S. dollar by approximately 16.2% over the last 90 days. I wonder what that comparison will look like in 2029.
Our lean: we have another big week of economic reports, with the highlight being Thursday, when we get a look at the April PPI and Powell’s speech. My gut says we’re still going up, but the ES has to clear 5740 and hold. If it does, then we can start talking 5800–5850. Barring any major news, I would like to buy a lower open. If that doesn’t happen, I may look at selling a big gap up. The trend is your friend.
Update: Bessent says two days of talks with China yielded “substantial progress,” promising additional details Monday. The ES opened Sunday night's Globex session 71 points higher and rallied up to 5768.50. My guess is we pull back either at the open or by mid-morning. As of my writing this last night, the ES was up 640.75 points from the April 7 low of 5127.75.
Our Lean — Danny’s Trade
This is Danny Riley’s personal trading plan for the day.
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MiM and Daily Recap
The S&P 500 futures opened the regular session at 5699.75 following an overnight Globex rally that reached a high of 5715.25 at 07:42 ET. The early tone was bullish, but a lower high of 5710.00 was set at 09:36 before sellers took control. A swift drop to 5693.00 by 09:51 marked the first meaningful low, quickly followed by a recovery bounce to 5708.75 at 10:09. However, that lower high proved to be a trap as a sustained decline followed, breaking to 5662.50 at 10:39, the session’s low and a 48-point reversal from the morning’s peak.
From there, buyers staged a sharp rebound, lifting the market to 5687.50 by 11:06, a 25-point bounce, only to give back ground into a midday low of 5673.50 at 11:30. This back-and-forth continued as price surged again, reaching 5691.50 at 12:00 before pulling back to 5680.50 at 12:18 and dropping further to 5669.00 at 12:42. The tone improved once again with an afternoon rally that reached 5688.50 by 13:57 before fading to 5675.50 at 14:18.
Late afternoon action saw a final spike to the high of 5694.00 at 15:09, followed by a fade into the final hour where the low of 5674.25 printed at 16:00. The regular session settled at 5677.75, down 22.00 points or -0.39% from the open and down 8.75 points (-0.15%) from Thursday’s cash close.
Globex provided early optimism, adding 13.25 points from Thursday’s settle to Friday’s Globex close (5699.75). However, the regular session erased that strength. Cleanup added back 6.00 points to close at 5684.00, trimming the day’s full-session loss to 4.50 points (-0.08%) open to close or -8.75 points previous cash close to close.
Friday’s tape was characterized by back-and-forth swings with no decisive trend—bulls and bears exchanged control repeatedly without clear dominance. While the overnight session attempted a breakout, the regular session failed to maintain momentum, producing a series of lower highs and lower lows that capped rallies and deepened the day’s decline.
Volume was a bit light with 777,466 contracts trading during the regular session, bringing the full day total to 982,884. The intraday structure suggests a market still searching for direction amid headline sensitivity.
Market-on-Close (MOC) imbalance data leaned bullish with $1.457B to buy at 15:50 ET, and the imbalance percentage hit the 66.7% threshold—indicating a strong directional skew. However, the symbol imbalance ended at only 55.4%, suggesting the flow was concentrated in fewer large names rather than broad-based.
Despite that strong dollar bias, the late-day action was muted as the ES briefly tested 5674.25 just after the imbalance reading before inching back above 5680. No major breakout followed, indicating hesitation among large participants.
In conclusion, the ES saw early Globex strength fade through the regular session with price chopping between 5662 and 5715. While MOC flow leaned supportive, broader sentiment felt unresolved. The market may need further catalysts to define direction in the upcoming week.
Technical Edge
Fair Values for May 12, 2025:
SP: 16.82
NQ: 72.16
Dow: 71.96
Daily Breadth Data 📊
For Friday, May 9, 2025
NYSE Breadth: 59% Upside Volume
Nasdaq Breadth: 60% Upside Volume
Total Breadth: 59% Upside Volume
NYSE Advance/Decline: 57% Advance
Nasdaq Advance/Decline: 49% Advance
Total Advance/Decline: 52% Advance
NYSE New Highs/New Lows: 50 / 24
Nasdaq New Highs/New Lows: 92 / 103
NYSE TRIN: 0.79
Nasdaq TRIN: 0.64
Weekly Breadth Data 📈
For the Week Ending May 9, 2025
NYSE Breadth: 54% Upside Volume
Nasdaq Breadth: 56% Upside Volume
Total Breadth: 55% Upside Volume
NYSE Advance/Decline: 58% Advance
Nasdaq Advance/Decline: 49% Advance
Total Advance/Decline: 52% Advance
NYSE New Highs/New Lows: 141 / 110
Nasdaq New Highs/New Lows: 256 / 303
NYSE TRIN: 1.15
Nasdaq TRIN: 0.73
Room Summaries:
Polaris Trading Group Summary Friday, May 9, 2025
Friday was marked as a Capital Preservation Day in the PTG trading room, with a clear tone set by PTGDavid early on. The day prioritized risk management and measured setups, with trading opportunities focused around key levels in the CL (Crude Oil Futures) and broader market structure. David announced a mid-day departure, leaving charts online for continued observation. Despite a defensive posture, the session offered strong lessons and precise execution in defined windows.
Key Highlights & Trades:
CL Open Range Short:
Early in the session, David called out a CL (Crude Oil) Open Range Short that hit lower targets successfully. By 10:25 AM, the short setup had FULL PAY with All Targets Fulfilled, making it the standout trade of the day.Bullish Fulfillment:
Early bullish scenario from 5685 targeting 5710–5715 was met and fulfilled efficiently. Price action respected PTG’s levels with strong alignment between setup and execution.Bearish Shift Mid-Morning:
After hitting upper targets, the room shifted to a bearish lean on bounces, targeting the 5650–5645 zone. This adaptability exemplified disciplined response to evolving price structure.Educational Emphasis:
A significant amount of the day focused on refining personal trading rules, execution discipline, and trading psychology. Comments from DanV and others emphasized the importance of execution over mere chart knowledge.
Lessons & Takeaways:
Execution is Key: “Execution separates the boys from the girls,” as DanV put it—reminding traders that knowing levels is not enough without proper execution.
Personal Rule Refinement: Several members mentioned refining their own trading rules—a great sign of internalizing PTG’s structured approach.
Capital Preservation Mindset: Though a quieter day in terms of volume, the focus remained sharp. The designation of “Capital Preservation Day” reinforced the importance of being selective and defensive when the environment calls for it.
End of Day Reflection:
The afternoon remained quieter with some humor and camaraderie, especially around PTGDavid’s departure for a medical appointment. The day's fulcrum level was identified at 5685, around which price oscillated into the close. A lighthearted tone rounded out the session as members joked about whiskey and weekend plans.
Weekend Note:
By Sunday evening, David noted a price gap up to the Money Box level 5769.50 on news of China trade developments. Despite the move, he labeled it a “yawn,” cautioning that bulls need sustained action above 5850 to hold significance.
Final Word:
A disciplined, low-risk trading day where the CL Open Range Short stood out as a textbook PTG setup. Members deepened their rulebooks and refined focus—hallmarks of consistent trading growth.
DTG Room Preview – Monday, May 12, 2025
Top Story:
US futures surged overnight following news of a 90-day trade war truce between the US and China, with both sides agreeing to reduce tariffs to 10%. Treasury Secretary Bessent emphasized that neither nation wants a decoupling, while Chinese Vice Premier He Lifeng hailed the Geneva talks as a key first step. However, 20% tariffs tied to fentanyl trade remain.Market Impact:
Dollar/Yields Up, Gold Down: Stronger US dollar and higher Treasury yields accompany falling gold prices.
Pharma Stocks Sink: Global pharmaceutical names are under pressure after President Trump pledged an 80% cut in US drug prices. Major US drugmakers are down premarket, missing out on the broader rally.
Executive Order Incoming: Trump to sign an EO on drug pricing at 9:00 AM ET, likely triggering legal challenges from the industry.
Policy Developments:
House GOP aims to claw back $6.5B from unused climate funds in the Inflation Reduction Act, targeting environmental justice, renewable energy, and emission programs. Methane fee collection may be delayed.
Earnings & Events:
Premarket: SBS, DVA, FOX, FOXA, NRG, PBR
After the bell: SPG
Econ Data: Federal Budget Balance @ 2:00 PM ET
Fed Speak: Gov. Kugler @ 10:25 AM ET
Technical Picture (ES Futures):
Overnight breakout tested the short-term uptrend channel top (5859/64); resistance remains here with the 200-day MA (5871.75) also back in play.
Support zones: 5614/19, 5259/64, 5107/02, 4962/67
Volatility contracted Friday; 5-day ADR is 74.50
Whale bias bullish despite low large trader volume overnight
S&P 500 — ES Futures
Calendars
Economic
Important events for the rest of the week:
S&P 500 Earnings
Recent
