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Chop City: Rally, Dump, Repeat
Danny Riley
April 29, 2025
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One of the patterns that has been sticking out over the last five sessions is when the ES gaps higher, it sells off quickly and then moves back up. I just hung up with the PitBull , he sold out his stock into the early highs and said he was going to be gone for three hours. I told him not to worry, that he's not going to miss anything, that it’s going to be like this for a long time. His response: "I know."
I have been saying we live in an ever-changing environment forever, most of which was directed at the markets and electronic trading — i.e., the algos and HFT — but it’s not just the S&P and Nasdaq that are changing. Yields have risen significantly, and several well-known economists and heads of big hedge funds have been warning about the treasuries and their sustainability.
Last night, I came across a story I wrote about a few weeks ago: what if China started unloading their US notes and bonds? Look at gold — it's at $3,300 — what's it going to, $3,500? It sure looks that way. Everything is evolving or shifting, and most of it is not in favor of the US or its economy.
So the question is: how sustainable is the current stock market rally? Is it just another dead cat bounce? Will the ES and NQ make new lows, or do they trade in a big trading range until some major events take place?
The dollar just sold off down to 0.8766, down 0.57%, after this headline hit:
China Foreign Ministry says no calls between Trump-Xi: "As far as I know, there have not been any calls between the two presidents recently. Let me make it clear one more time that China and the U.S. are not engaged in any consultation or negotiation on tariffs."
The headlines have been both good and bad for the markets. After making a 5492.00 low, the ES rallied all the way up to 5578.75 as the NYSE imbalance showed $3.3 billion to buy, and then sold off down to the 5545 area after 4:00. Like I said earlier, it was going to be a two-way street — and it was.
After yesterday’s oversized OP, I’m going to cut back a bit today.