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- Gasoline Lit the Fuse, Bonds Took the Hit, and Now the Indexes Are on the Ropes
Gasoline Lit the Fuse, Bonds Took the Hit, and Now the Indexes Are on the Ropes
Danny Riley
May 13, 2026
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While the Middle East conflict shows no signs of progress, oil prices keep rising. Brent crude added 3.4% to $107.77 a barrel and U.S. crude rose to $102.18 after the US CPI data showed that April inflation jumped to 3.8% on an annual basis, driven by a surge in gasoline prices. The reading was slightly hotter than expected, pushing 10-year note yields to a one-year high, rising to 4.462%, its highest closing level since May 4, 2025. This just as President Trump prepares to meet with Chinese leader Xi Jinping and we wonder how the discussions could impact trade and the war in Iran.
Before boarding his jet to China, Trump was quoted as saying that he’s going to have a great meeting with China’s Xi Jinping. “My relationship with President Xi is a fantastic one. We’ve always gotten along and we’re doing very well with China, and working with China has been very good, so we look forward to it.”
There was also another story — I hate to be a pessimist, but seeing will be believing — about how a Trump-Xi deal could create a small door into the U.S. for Chinese EV makers, which U.S. auto industry groups and bipartisan lawmakers are pressing President Trump not to open at the summit after he previously said it would be “fantastic” if Chinese automakers built factories in the U.S. and created jobs.
It always seems like Trump is trying to cut deals that are either not in the best interest of the US, like the $12–14 trillion “Dmitriev Package” in early 2026, in which the Kremlin’s economic envoy, Kirill Dmitriev, pitched a massive portfolio of potential joint U.S.-Russian projects.
The headlines for the high-stakes summit in Beijing are expected to hit the wires starting tomorrow, with the most significant news likely breaking throughout that day and into Friday.
Our Lean — Danny’s Trade (Premium only)
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(ZNM26) 10 YR Note Futures vs 10 YR Yield ($TYX) 3-Month Chart
The ES traded up to 7424.00 on Globex and sold off down to 7398.75 after the Consumer Price Index rose at a seasonally adjusted 0.6% for the month, putting the one-year pace at 3.8%, and opened Tuesday’s regular session at 7414.00, down 24.75 points or -0.33%.
After the open, the ES traded 7417.75 and then sold off down to 7400.25, rallied back up to 7414.00, sold off 13.75 points, and then the NQ started to reverse and the ES sold off 22.50 points down to 7391.50 at 10:00. It rallied 17.25 points back up to 7408.75, just under the VWAP, sold off 28.75 points down to a new low at 7380.00, short-covered up 17.00 points up to 7397.00, and then made a series of lower lows to 7363.50 at 11:25.
After the low, the ES rallied 19.25 points up to 7382.75, sold off 16.50 points down to a higher low at 7366.25 at 12:00, with sell programs into the hour, rallied up to 7380.00, and sold off 116.50 points down to 7263.50. It then rallied 146.50 points up to 7410.00 at 2:25, back-and-filled in a 4- to 6-point range, popped up to 7418.50 at 3:15, pulled back to 7410.50, and then rallied up to 7425.75 at 3:30, 162.25 points off the 7263.50 low.
After a small pullback, the ES rallied up to 7427.00 and traded 7425.75 as the 3:50 cash imbalance showed $3.5 billion to buy and traded up to a new high at 7434.00 at 3:55. The MIM NQ-100 imbalance was $2.4 billion to buy and then “flipped” to $1.3 billion to sell, and the ES traded 7428.25 on the 4:00 cash close.
After 4:00, the ES sold off down to 7416.00 at 4:10 and settled at 7420.50, down 16.25 points or -0.22%; the NQ settled at 29,134.25, down 288.15 points or -0.98%; the YM settled at 49,867.00, up 75 points or +0.15%; and the RTY settled at 2,848.80, down 20.10 points or -1.05% on the day.
In the end, the sell-off was a perfect economic storm due to hotter-than-expected inflation data, rising Treasury yields, escalating geopolitical conflict in Iran driving oil prices higher, and uncertainty regarding 10% blanket tariffs. In terms of the ES and NQ’s overall tone, they could not have looked worse, but then there was a big bounce. In terms of the ES’s overall trade, volume was lower at 1.547 million contracts traded.
Math Problem: Gas Vs. Wages
I don’t know what to say other than, for the first time in three years, rising inflation has officially overtaken wage growth, leaving Americans with a “math problem” as their purchasing power shrinks. Driven largely by a 50% surge in gasoline prices—now averaging $4.50 per gallon following geopolitical conflict in the Middle East, and the cost of living has climbed to 3.8%. Because hourly wage growth slowed to 3.6% over the same period, real hourly earnings have declined by 0.2%, effectively wiping out recent pay raises, which explains why consumer sentiment is at a record-low level. I think people are getting scared, yet the stock markets continue to deflect all the negatives.
On Tap Today
PPI Inflation Report
Alibaba, Cisco, StubHub, USA Rare Earth, Nebius, Birkenstock
Neel Kashkari and Lorie Logan speak.
Guest Posts — Polaris Trading Group
🎯 @ES Scenarios in Play
🟢 Bull Case — Buyers Stabilize & Reclaim
Acceptance Above: 7410 ±5
Upside Objectives
7430
7435
7445
This signals responsive buying evolving into initiative control.
⚠️ But remember:
This is recovery mode — not dominance yet.
🔴 Bear Case — Continued Rotation / Controlled Reset
Acceptance Below: 7410 ±5
Downside Objectives
7395
7380
7375
This is not panic selling —
This is an orderly distribution… the kind that grinds traders down.
📊 Key Reference Levels
PVA High Edge: 7410
PVA Low Edge: 7369
Prior POC: 7408
👉 Important:
These levels cluster tightly — forming a decision zone, not noise.
⚠️ Tactical Takeaway
Of course, nothing changes for PTG…Simply follow your plan. Take only Triple A setups and manage the $risk. ALWAYS HAVE HARD STOP-LOSSES in-place on the exchange.
PTG’s Primary Directive (PD) is to ALWAYS STAY IN ALIGNMENT with the DOMINANT FORCE.
ES
— PTG
The MOC session opened with a powerful buy-side tone across the broader market as early imbalance data showed aggressive institutional demand flowing into the close. By 15:51, total market imbalance ballooned to +$4.44B with buy orders totaling nearly $6.0B against just $1.53B for sale, producing an exceptionally strong dollar lean of +79.6%. The S&P 500 complex led the advance with a remarkable +83.3% dollar lean while Nasdaq names carried an equally strong +85.8% lean, confirming broad participation from both growth and index-linked flows.
The opening phase of the imbalance window was characterized by wholesale buying rather than rotational activity. Energy posted a massive +94.4% dollar lean while Information Technology registered +88.6%, both signaling dominant institutional accumulation. Consumer Discretionary also printed a highly aggressive +87.1% lean. Readings above +66% generally indicate one-sided institutional demand rather than paired rotation, and several sectors comfortably exceeded that threshold.
Leadership among individual names was concentrated in mega-cap technology and momentum growth. TSLA dominated the tape with a staggering +$445.77M imbalance, followed by AAPL at +$316.82M and NVDA at +$316.31M. Semiconductor demand remained extremely strong as AVGO, AMD, NXPI, MRVL, and MCHP all appeared among the largest buy imbalances, reinforcing continued institutional appetite for AI and chip exposure. PLTR and MSTR also attracted notable demand, reflecting continued speculative growth participation.
Outside technology, strong buy programs appeared in CVX within Energy and LLY in Health Care, while financials saw mixed but positive activity through JPM, BAC, and C. Industrials were supported by HON buying interest.
As the close approached, the tone shifted materially. Beginning around 15:55, sell pressure accelerated sharply, driving total imbalance negative into the bell. By 16:00, market imbalance had reversed to -$2.10B with sell orders overwhelming buys by nearly 4-to-1. This late transition suggested significant offsetting sell programs, profit-taking, and index-related rebalancing after an earlier session dominated by aggressive institutional accumulation.
Technical Edge
Fair Values for May 13, 2026:
SP: 23.46
NQ: 108.85
Dow: 87.64
Daily Breadth Data 📊
For Tuesday, May 12, 2026
• NYSE Breadth: 42% Upside Volume
• Nasdaq Breadth: 37% Upside Volume
• Total Breadth: 39% Upside Volume
• NYSE Advance/Decline: 39% Advance
• Nasdaq Advance/Decline: 34% Advance
• Total Advance/Decline: 36% Advance
• NYSE New Highs/New Lows: 68 / 75
• Nasdaq New Highs/New Lows: 115 / 190
• NYSE TRIN: 0.89
• Nasdaq TRIN: 0.86
Weekly Breadth Data 📈
For the week ending Friday, May 8, 2026
• NYSE Breadth: 49% Upside Volume
• Nasdaq Breadth: 57% Upside Volume
• Total Breadth: 54% Upside Volume
• NYSE Advance/Decline: 55% Advance
• Nasdaq Advance/Decline: 58% Advance
• Total Advance/Decline: 57% Advance
• NYSE New Highs/New Lows: 370 / 128
• Nasdaq New Highs/New Lows: 854 / 357
• NYSE TRIN: 1.32
• Nasdaq TRIN: 1.03
ES & NQ Futures trading levels (Premium only)
Polaris Trading Group Summary - Tuesday, May 12, 2026
The session opened with a heavier tone in the ES futures market following hotter-than-expected CPI data. Core inflation came in slightly above expectations, which immediately shaped trader sentiment toward caution and downside pressure early in the day. David noted that the lower ES target at 7405 had already been fulfilled during pre-RTH activity, setting up an important framework for the day’s trade location and possible reversals.
Market Theme & Direction
David established an “Early Short Lean for Cycle Day 1”, reinforcing the bearish bias after the inflation release. However, an important lesson throughout the morning was that key downside targets can become powerful reversal triggers once reclaimed. The room focused heavily on how the market behaved around:
D-Level
Money Box Levels (MB1 & MB2)
Reclaims of prior key levels
Bull Stacker shifts and intraday structure
David pointed out that target levels noted can act as reversal triggers. That concept played out well intraday as the market reclaimed important zones and rotated higher.
Best Trade Developments
One of the cleaner opportunities developed around the D-Level reclaim and tag:
David announced the D-Level was “in-play”
Shortly after, the room saw:
“Dlevel tagged and 1st target PL fulfilled”
This provided traders with a structured, rules-based long opportunity after the earlier bearish pressure.
This reflected one of the day’s strongest practical lessons:
bearish context does not eliminate tactical long opportunities
reclaim behavior matters
structure and reaction at levels are more important than opinion
Key Educational Takeaways
David spent considerable time clarifying how the Money Box Levels should be traded:
MB1 & MB2 Framework
MB1 entries can target D-Level
MB2 entries can target MB1 first, then D-Level
Reclaims are valid entry triggers
Bull Stacker shifts can confirm participation
This was a strong process-oriented session focused on:
trade planning
structured entries
scaling targets
using objective levels instead of prediction
John B’s Data Research Project
One of the highlights was John B sharing a developing statistical research project:
exporting Sierra Chart indicator data
converting outputs into Excel
using Claude AI to analyze patterns
studying return behavior to prior highs/lows
David validated the concept, particularly the observation about price returning to prior highs/lows rather than relying on generic time blocks.
This became a strong “lesson learned” moment:
combining discretionary trading concepts with quantified research can strengthen conviction and execution.
Overall Tone of the Day
The session blended:
macro awareness (CPI impact)
disciplined level trading
tactical flexibility
strong trader collaboration
The biggest success of the day was not just identifying directional bias, but adapting when the market reclaimed important structure. Traders who stayed patient and focused on D-Level and Money Box reclaims were rewarded with clean, actionable setups.
The room maintained a constructive atmosphere throughout, with strong engagement, research sharing, and practical execution discussions.
Discovery Trading Group Room Preview – Wednesday, May 13, 2026
Macro Focus:
Markets are focused on today’s 8:30am ET PPI report after CPI reinforced expectations that the Fed will likely hold rates steady.
Geopolitical Update:
US-Iran headlines remain a key risk.
Trump’s China visit may help ease trade tensions, though expectations for a major deal remain low.
China / Nvidia:
Jensen Huang joined the China trip, raising hopes for progress on Nvidia H200 AI chip sales to Chinese customers.
Fed Update:
Kevin Warsh was confirmed to the Fed Board.
Markets will watch his potential rate stance in the June dot plot.
Earnings:
Premarket reports include Alibaba (BABA).
Cisco (CSCO) reports after the close.
Today’s Calendar:
PPI at 8:30am ET.
Crude Inventories at 10:30am ET.
Collins speaks at 11:30am ET.
Kashkari speaks at 1:15pm ET.
ES Outlook:
Volatility remains elevated with the ES 5-day average daily range at 82 points.
Overnight whale flow leans bullish into PPI.
Key ES Levels:
Resistance: 7474/77s.
Support: 7378/81s, 7232/37s, 7055/60s.
