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Our View

What happened to the ES and NQ? They both made new highs again. After opening higher, the ES and NQ did what they do best — they pulled back and then rallied again. I haven’t thought much about it, but the ES and NQ act exactly like they did after the Fed started quantitative easing during the 2008 credit crisis: rally, pull back, and rally again.

In fact, the ES has gained approximately 909% from its lowest closing level during the 2008 financial crisis — which was 666.79 on March 6, 2009 — to yesterday's Globex high of 6,719.75.

On a smaller scale, the ESZ has rallied 1,787.75 points or 36.2% from its 4,932 low on April 7, and the NQ has gained 7,943 points or 41.7%.

The ES made an early low of 6670.25 at 9:45, rallied up to a day session high of 6718.00, sold off down to a 6694.00 double bottom, rallied up to a lower high at 6705.50, sold off down to a higher low at 6697.00 at 11:57, and then rallied 14 points up to another lower high at 6711.00 at 2:06.

After the push, the ES back-and-filled in a 10-point range, sold off down to another higher low at 6691.75, rallied back up to 6703.75 at 3:12, sold off down to 6688.25 at 3:45, traded 6691 as the 3:50 imbalance showed $2 billion to sell, traded 6692.25 on the 4:00 cash close, and settled at 6693.50, up 34.75 points or +0.52% on the day.

In the end, Thursday's trade went according to how I thought it would — selling the early rallies and some repositioning for the September Quad Witching expiration.

In terms of the ES’s tone, it was firm early and weakish late. In terms of the ES’s overall trade, volume was on the higher side with 1.457 million contracts traded.

• ESU volume: 283k

• ESZ volume: 1.74 million

On Tap

San Francisco Fed President Mary Daly speaks at 2:30, along with the September Quad Witching expiration.

Our View

The NVDA (+3.5%) / INTC (+23%) deal pushed the Nasdaq to its 27th record high and the S&P to its 26th new high. But the big push stalled as the yield on the 10-year note rose to 4.104% from 4.073% on Wednesday. The $2 billion for sale on the 3:50 imbalance and short bets being put on ahead of today's September Quad Witching added to the late weakness.

While there are quarterly expirations, there are also quarterly rebalances, and just like the expiration, they also fall on the third Friday of March, June, September, and December. The rebalancing ensures the index remains an accurate representation of the current market. By making timely adjustments, the S&P 500 reflects the changing U.S. economy and aligns with quarterly financial results. It also ensures that no single sector or company has too much sway over the performance of the index and that each company meets its capitalization requirements, which is calculated by multiplying the number of outstanding shares by the share price.

Generally, these rebalances do not affect the retail trader much, and for people holding retirement accounts or mutual funds, the 'switch' should have little impact. $APP, $HOOD, and $EME will be added, and $MKTX, $CZR, and $ENPH will be removed from the index.

Most of this, like the trading, will be done in the final 20 minutes of the day, which also coincides with the September quarterly expiration. Sometimes they move in other directions and cause very large volume prints on the 4:00 cash close.

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Get instant access to our partners’ real-time market data and insights not available anywhere else. Here is last night's Founder’s note getting you ready for today’s market and explaining the constraints in yesterday’s market. - MrTopStep

Founder's Note:

Futures are up 10bps with no major data on the schedule. SPX AM options roll off at 9:30AM ET, which is the bulk of size expiring for Sep OPEX. Given that, watch for ES swings near the open. Single stocks & all other ETF's expire at 4PM.\

TLDR: We favor staying long with SPX > 6,600. We will be adding small lotto put spreads and/or flies tied to the 6,500 level for next week/into 9/30 exp. This is because the potential is there for 6,505 to be a magnet into that exp.

Post OPEX the look for SPX GEX is much the same: relative positive gamma >6,505, and due to 6,505, we don't see negative gamma until <6,400. Given that, we think that if there is a mild pullback post-OPEX it should not break the big 6,505 level before 9/30 expiration.

To the upside, the Call Wall remains at 6,650, which is first resistance for today. A break above 6,660 could indicate a larger move into 6,680.

We've talked a lot about the SPX IV kink for pre/post Sep 30th OPEX, and that is still in place. Pre 9/30 IV's are in the gutter - at or below 10%. First, that implies no one sees risk. Second, this suggests to us is that if OPEX does trigger a mild pullback, traders are not pricing that in. Therefore it could be a quick jump into 6,500, but we'd anticipate downside haulting there. That path may not be projected from anyone outside of us in the gamma realm.

SPX fixed strike is smashed, VIX and the VIX complex remains a bit bid. 15.5 VIX is quite rich compared to ~8% SPX realized vol. That decent vol premium can be a vol absorber, which to us backs a 6,500 low into 9/30.

In the sector space, we are seeing call bids pick up relative to puts after FOMC. This is shown as symbols shifting to the right on Compass. If call IV's were higher into OPEX, or feeling for a big OPEX pullback would be stronger. However, the call/put pricing (and positions) seems pretty balanced to us. The only thing that seems a bit stretched is the SPX price itself. We would say that stocks which are at stretched highs which high relative IV's are more likely for a post-OPEX correction.

Get instant access to our partners real-time market data and insights not available anywhere else. Here is last night Founder’s note getting you ready for today’s market and explaining the constraints in yesterday’s market. - MrTopStep

MiM and Daily Recap

The S&P 500 futures (ES) followed a two-sided path on Thursday, with swings in both the overnight Globex and the regular cash session before finishing with modest gains relative to the prior close.

Overnight trade began firm, with ES lifting to 6684.50 at 19:30, a gain of 72.50 points from the prior late-session low. Sellers then pressed prices down to 6676.75 by 20:50, erasing 7.75 points. From there, momentum returned to the upside, carrying ES to a higher high of 6693.50 at 00:30. A corrective pullback took hold, dropping the contract to 6680.00 at 02:30, before buyers mounted another push that carried ES to the Globex session high of 6719.75 at 05:10, a 39.75-point rally (+0.60%). However, this strength was not sustained, and ES reversed lower into the open, closing at 6686.75, up 25.50 (.4%) from the prior day’s close.

The regular session opened at 6686.75 and, after a brief struggle with the bears setting a morning low of 6670.25 at 9:45 AM,  staged a brisk rally to 6718.00 at 10:30, marking a 47.75-point recovery (+0.72%). Sellers again regained the upper hand, driving ES back down to 6694.00 at 11:05 and then bounced u and backdown to 6689.75 at 11:55. A midday bounce took futures back to 6711.00 at 13:00, but that rally faltered as supply emerged. Prices retreated through the afternoon, making successive lower highs at 6704.00 at 14:55 and another dip to 6691.50 at 14:40. The afternoon low came at 15:45, when ES hit 6686.75, a drop of 15.75 points (-0.23%) from the prior leg. Futures finished the cash session at 6692.25, up 5.50 points from the open  (+0.08%) and 32 points from the previous close. Cleanup trade extended slightly higher, settling at 6698.75.

On a session-to-session basis, ES closed 32.00 points higher (+0.48%) from the previous cash close, marking a constructive though choppy advance. Total combined volume was 1.325 million contracts, with 1.04 million traded during the cash session.

Market tone leaned bullish, holding the day’s gap through the intraday swings. While buyers were able to defend lows and force countertrend rallies, every push higher was met with supply, capping upside momentum. The price action featured sharp reversals that underscored a lack of conviction and an underlying distributive tone.

This was confirmed by the Market-on-Close imbalance data. At 15:50, the NYSE imbalance showed $2.065 billion to sell, with the dollar percentage reading -76.5% and the symbol imbalance at -67.8%. Both measures breached the -66% threshold, indicating a strong sell imbalance. Sector breakdowns showed the heaviest selling pressure in Financials (-$598M net), Healthcare (-$397M), and Consumer Defensive (-$327M), while only Technology posted a modest net buy of +$76M. Large sell imbalances were concentrated in JPM (-$111.8M), V (-$87.8M), and WMT (-$82.1M), among others.

Despite the small net gain from the prior cash close, the session’s tone was cautious, with sellers pressing into strength and a broad-based negative skew in imbalances. The day ended with ES holding above its morning lows but still below its intraday peaks, leaving traders to watch whether follow-through selling develops into the next session or if buyers can stabilize above the 6690 pivot zone.

How to read the MIM

Technical Edge

Fair Values for September 19, 2025

• SP: 58.6

• NQ: 246.48

• Dow: 351

Daily Breadth Data 📊

For Thursday, September 18, 2025

• NYSE Breadth: 66% Upside Volume
• Nasdaq Breadth: 74% Upside Volume
• Total Breadth: 73% Upside Volume
• NYSE Advance/Decline: 65% Advance
• Nasdaq Advance/Decline: 71% Advance
• Total Advance/Decline: 69% Advance
• NYSE New Highs/New Lows: 148 / 31
• Nasdaq New Highs/New Lows: 437 / 61
• NYSE TRIN: 0.99
• Nasdaq TRIN: 0.83

Weekly Breadth Data 📈

Week Ending Friday, September 12, 2025

• NYSE Breadth: 54% Upside Volume
• Nasdaq Breadth: 64% Upside Volume
• Total Breadth: 60% Upside Volume
• NYSE Advance/Decline: 56% Advance
• Nasdaq Advance/Decline: 59% Advance
• Total Advance/Decline: 58% Advance
• NYSE New Highs/New Lows: 360 / 71
• Nasdaq New Highs/New Lows: 755 / 214
• NYSE TRIN: 1.08
• Nasdaq TRIN: 0.77

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Trading Room News:

Polaris Trading Group Summary - Thursday, September 18, 2025

Yesterday’s trading session began with a few technical hiccups as PTGDavid experienced issues logging into NinjaTrader via Rithmic, though he successfully connected through Sierra Chart while working with support. Once connected, the room moved into the session with key levels clearly defined.

Morning Session Highlights

• Precision Off the Open:
  PTGDavid noted an "ultra precise" tag of the 6719.30 Cycle Day 3 Penetration Target, showing the power of the 3-Day Cycle levels. This precise touch set the tone for the day and reinforced the validity of those levels as trade references.

• Short Trades Early On:
  Members like slatitude39 capitalized early, shorting off the 1-minute chart from 6706 based on prior day discussion—a good example of preparation and execution.

• Sell-Side Dominance Early:
  David called out early sell-side dominance and defined the LIS (Line in Sand) at 6675, which helped traders anchor their directional bias.

• Bosier actively shorted from 82.5, scaling out at 79.5 and 76.5, and later switching long when market dynamics shifted—a textbook example of flexibility and adaptability.

Shift to Long Bias

• Around 10:07 AM, David advised to be “flexible… shift to long probes,” which was a key turning point. This pivot paid off for traders like Bosier, who went long from 6694 and scaled at 6697 and 6700.

• John B and others noted the straight-line move up after escaping 6685—indicating strong directional flow.

• Manny highlighted a long trigger zone around SPX 6620 / ES 6680, with targets up to 6760, which helped set context for the rest of the session.

Key Lessons & Positive Outcomes

• Cycle Levels Matter:
  The Cycle Day 3 level at 6719.30 was nailed to the tick, reinforcing the importance of these reference points in daily prep.

• “Not Trading is a Trade” – A great reminder from Ram and echoed by others. Several traders acknowledged discipline in not forcing trades during chop.

• Micros and Mindset:
  Manny shared valuable insight on using micro contracts to stay engaged without emotional overload—a great psychological edge for less aggressive days.

• Flexibility Pays Off:
  Several traders shifted bias mid-morning, catching the trend higher, while others like Roy_ and Bosier were engaged in disciplined trade management using tools like volume ratio and VWAP.

Afternoon Session & Close

• Lunchtime Churn:
  David noted that “not much meat on the bone in the middle” as price action stalled. Roy_ attempted a first pullback long, but was stopped—a good effort, just didn’t resolve.

• MOC Action:
  Into the close, MOC sell algos activated, with David reporting a $2 billion sell imbalance.
  The session closed near mid-VWAP, wrapping up what David called a “solid 3-Day Cycle.”

Key Takeaways

• Precision at Key Levels can define the day—CD3 target hit perfectly.

• Flexibility is Critical—shifting from short to long as the market structure evolved led to real opportunities.

• Patience Pays—waiting for triggers, as emphasized by both David and Manny, led to the best setups.

• Capital Preservation Reminder—David wrapped the day with a reminder that tomorrow is “Capital Preservation Day”, a nod to OpEx Friday volatility and risk.

Overall: A strong, methodical day in the room—technical tools worked, traders stayed flexible, and multiple lessons on discipline and precision were highlighted throughout the day.

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Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.

Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!!

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