The study I put in Monday’s Opening Print about what happens the week after the NQ falls 4.5% and the ES drops 2% continued to shine yesterday. The ES has retraced 51 points, or +0.66%, recovering part of Friday’s 1.11% loss.

As for the NQ, it rallied 331 points, or +1.13%, on Monday, October 19. On Tuesday, October 20, it gave back just 47.25 points, or -0.16%, and my Tuesday-evening note cited a further 212-point Globex rebound.

Like I have said so many times, TV and internet news condition the public to think the worst, but that is not always how the markets actually work. I agree there are reasons to be concerned, but that doesn't mean we're supposed to jump off a bridge. If stock market history has taught us anything, it's that overreacting costs money.

While some sharp selloffs begin rebounding almost immediately, returning to the previous high can take much longer than we would like. Below are several studies I put together that show how quickly the markets have rebounded after major selloffs and how long some of the biggest declines took to fully recover.

The bottom line is that some major bear markets have taken several years to fully recover, while smaller corrections have recovered much faster. Starting to rebound and returning to the previous high are different things.

According to Morgan Stanley's publication, Market Essentials, published October 7, 2025, my comparison of 4.3 months versus two months is supported by Morgan Stanley's report. However, two distinctions matter. Morgan Stanley's historical study covers 1975 through 2024 and found that S&P 500 corrections of more than 10% but less than 20% took an average of 4.3 months to recover their previous highs. That figure does not include larger bear-market declines of 20% or more.

But rather than just telling you what I think, I've provided the link so you can review the report yourself.

Read the Morgan Stanley report

I have yet to master my AI research, and I don't know if I ever will, but I think AI stock market research is eye-opening. Marlin has pointed out some things I can do to avoid making mistakes, and I'm trying to implement those changes, so please bear with me.

Better yet, please email me and tell me what you think. Don't worry about hurting my feelings because I believe constructive criticism is all about improvement. So please email me at [email protected] and tell me what I can do better or how I can improve.

Cycle Day 3 — Respect the Odds

By David Dube, Polaris Trading Group

New: PTG Trading Room Recordings

We are now recording the PTG Trading Room Morning Session. These will be raw, unedited and possibly lengthy. While watching, adjusting the playback speed is recommended. You will be able to find the most recent five session recordings here: Polaris Trading Group Live Stream Videos.

Trading Room recap archives: PTG Recap.

PTG cites a historical 92.53% Positive Three-Day Cycle statistic as the backdrop. This is PTG’s reported statistic, not an independently verified probability or guarantee.

Notice we said probability…
Not prophecy.
The statistic gives us the directional edge.
Price still has to prove it.

Bull Script

Acceptance above 7780 ±5.

Bull roadmap: 7795, 7805, 7815.

Bear Script

Acceptance below 7780 ±5.

Bear roadmap: 7765, 7755, 7745.

Key Structural Reference Levels

These aren’t forecasts. They’re magnets.

• PVA High Edge: 7774

• PVA Low Edge: 7744

• Prior POC: 7754

• Cycle Day 1 Low: 7677

These are the areas where the auction naturally slows, rotates, negotiates, and ultimately decides.

Trade the structure.
Respect the auction.
Let the market reveal its hand before you play yours.

PTG Execution Protocol

Take only Triple-A setups.
Manage the $risk.
ALWAYS HAVE HARD STOP-LOSSES in place on the exchange.
No chasing.
No predicting.
No heroic attempts at catching falling knives.

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.

About David Dube

David Dube is the founder of Polaris Trading Group and a professional trader and educator. His experience includes senior trading-management positions at Lehman Brothers and UBS Investment Bank. He moderates PTG’s trading room, explaining price action, trade setups and risk management. More about David and PTG.

Yesterday’s ES had to work through an early shakeout before buyers found their footing. The full session opened at 7740.75 Monday evening, reached an overnight high of 7752.75, and then slid to 7704.50 in the 8:25 a.m. ET five-minute bar. By the cash open, it had recovered to 7727.00. Globex still finished 13.75 points below its open, with 341,469 contracts traded.

The regular session put a different face on the day. After trading as low as 7710.25, ES rallied through Monday’s high and reached 7791.50 in the 10:30 a.m. bar. That was an 81.25-point regular-session range, but buyers did not keep the whole advance. By 3:50 p.m., ES was back at 7751.00. The final regular-session five-minute bar closed at 7759.00, up 32.00 points from the cash open; the separate last-trade snapshot at exactly 4:00 p.m. was 7760.75.

The cleanup hour brought another lift. ES finished at 7784.75 at 5:00 p.m., adding 25.75 points after the regular-session bar close. Official settlement was 7755.25, up 20.75 points from Monday’s 7734.50 settlement. Keep those measures separate: the final traded price was not the settlement.

In terms of the overall tone, the morning recovery held up better than the midday pullback suggested, and the late bounce left ES near the upper end of its full-session range. Five-minute bar volume totaled 1,668,479 contracts; official cleared volume was 1,740,657. The lesson was to respect both sides of the tape rather than confuse a strong morning with a one-way day.

A Sell Reveal, a Brief Turn, and Sellers at the Finish

The Reveal for the MOC on October 20 was $0.8 billion to sell. The sell indication deepened to about $1.2 billion before the late flow became two-sided. At 3:55 p.m., the board briefly showed $139 million to buy, flipped back to sell, then moved positive again at 3:57 and 3:58. That buying did not stick: the final displayed reading was $822 million to sell. The 3:55 p.m. period through the close is usually discretionary traders closing out the day, but the dashboard does not identify who placed these orders.

The accompanying name snapshot showed a semiconductor cluster on the sell side: Broadcom at $166.7 million, Micron at $154.7 million and AMD at $150.5 million. Buying was more dispersed. Procter & Gamble led at $152.0 million, followed closely by Alphabet at $150.5 million and Meta at $131.2 million. Those individual readings describe concentration, rather than the full market balance.

The sector mix told a similar story. Information Technology showed roughly $750.6 million to sell and Consumer Discretionary $286.2 million to sell. Communication Services supplied a $235.4 million buying offset, with Energy adding $168.9 million. Communication Services dollars leaned strongly toward buying even though its symbol breadth leaned toward selling, a useful reminder that a few large orders can dominate the dollars.

The overall feel was mixed beneath a sell-heavy headline. Late buying interrupted the pressure, but the finish returned to selling. I would read that as unresolved two-way demand, with technology concentration deserving more attention than the brief positive flashes alone.

How the NYSE and Nasdaq auctions work

How to read the MIM

Don’t trade the open alone. Join us live in The Pit for free, follow the conversation, and bring your questions.

Wednesday, October 21: David Dube / Polaris Trading Group is listed for 9:15 a.m. ET.

Economic Calendar

Also on today’s calendar: BLS Usual Weekly Earnings for the third quarter at 10:00 a.m. ET, followed by the EIA Weekly Petroleum Status Report at 10:30 a.m. ET.

Earnings Calendar

Polaris Trading Group

Polaris Trading Group’s Tuesday session moved from an overnight retracement into a strong morning recovery, then settled into consolidation. David framed the day as Cycle Day 2, following Monday’s sharp rebound from an oversold condition. The written updates captured both the long-side continuation and a later short setup, while the afternoon discussion emphasized reducing activity once the better opportunities had passed.

Overnight setup and Cycle Day

• David’s morning recap placed the line in the sand at 7740. Overnight consolidation gave way to a decline that fulfilled the secondary 7715 target, and he subsequently reported the third lower target at 7705 fulfilled.

• His framework was a retest after Monday’s unstable rise had satisfied the 7772 three-day-cycle objective. He described 62%–75% retracements as typical within that framework, with an occasional deeper return to the Cycle Day 1 low. That was his scenario, rather than a guaranteed path.

• By 9:02 a.m. ET, David reported a 20-handle recovery from 7705. The room therefore entered regular trading after an important downside reference had already been tested and a rebound was underway.

Opening conditions and the long lean

• At 9:35 a.m., David marked an early sandbox of “20–30.” At 9:54 a.m., he made the directional condition explicit: a long lean while price remained above 7730.

• The next reference was the overnight high, expressed in the room as 52.75. That shorthand remained distinct from the later fully specified prior-session high at 7773.25.

• By 10:17 a.m., David described the early back-test of the Cycle Day 1 breakout as successful. His objective was a retest of the previous day’s high, linking the recovery to Monday’s strength rather than treating the opening move in isolation.

Morning trade opportunities

• David reported the A4 long’s second target filled at 10:07 a.m. and its third target filled a minute later. He then said he was working the runner and moved the stop to entry.

• The next major objective was the 7772–7773 area. At 10:25 a.m., he reported the prior-high target fulfilled, followed by the 7775 extension target at 10:26 a.m.

• These were David’s contemporaneous room reports. The written record does not establish identical fills, position sizes or results across all participants.

Execution and runner management

• A question asked whether the A4 stop would adjust higher with additional gains. David’s reply specified the maximum 300-tick target or a flip-out, clarifying that management was tied to the strategy’s exit rules.

• At 10:33 a.m., he reported an A4 automatic-trail flip-out. The linked chart shows the rising sequence and exit annotation, supporting the described progression without independently verifying an account statement.

• An A10 long update at 10:41 a.m. reported three profit targets filled and a stop at breakeven. Its accompanying chart illustrates that later long setup, which should remain separate from the earlier A4 sequence.

Technical levels and changing conditions

• At 11:01 a.m., David identified continued consolidation above 7773.25 as the most bullish case. He also marked the 7772.85 three-day-cycle objective fulfilled and a new sandbox between 7775 and 7790.

• David linked crude-oil weakness to the equity rally in a morning observation. Later, he posted an unverified headline about Iran–U.S. talks. Those were room interpretations and headline context, not independently established causes of each price move.

The later short setup

• At 11:23 a.m., David reported three scales on an A10 short, with a runner still working and the stop moved to entry. The linked chart shows the short-side sequence and management annotations.

• He said the stream would remain available until that short was complete for the recording. The written messages do not provide a final runner result, so this recap does not infer an exit or total profit.

Capital preservation and the afternoon

• At 12:06 p.m., David said price was back near the midpoint VWAP zone, balancing the morning’s excitement. His later assessment favored the morning’s trade potential over lower-edge afternoon opportunities.

• Members described inactivity and ranging conditions. Near the close, David called the session a typical Cycle Day 2 with heavy consolidation, settling near the day’s midpoint VWAP zone.

Lessons for the next session

• The practical sequence was to respect the overnight target, adapt to recovery above the morning decision level, manage runners explicitly, and recognize when consolidation reduced the edge.

• With the three-day-cycle objective already fulfilled, David called Wednesday’s Cycle Day 3 a “wild-card.” That remains a planning condition, not a prediction of direction.

Polaris Trading Group’s Tuesday room recap

Discovery Trading Group Room Preview – Wednesday, October 21, 2026

The DTG group’s early-morning preview focuses on the ES 50-day moving average and the nearby overhead trendline. The group's large-trader read leans bullish, but it notes that overnight participation is light.

Bias and the decision area

• DTG places the ES 50-day moving average at 7773.50, in play as potential loose resistance or support.

• The group's inside trendline sits at 7786/83. Clearing that area could open a path toward 7900 over the next few days; otherwise, the group sees continued sideways trade between 7700 and 7800.

• A recovery above the 50-day average followed by a move above 7800 would be a bullish sign in the group's framework.

Levels to watch

• Potential trendline resistance: 7786/83, 7893/88, 7940/45, 8025/30.

• Potential trendline support: 7748/51, 7699/04, 7415/10.

Volatility watch

• DTG reports the ES five-day average daily range at 108 points, up from Monday’s 96.50.

• The group flags geopolitical headlines, Fed speakers and presidential social-media posts as potential volatility catalysts. These are the group's premarket observations and conditional scenarios, not verified trading outcomes.

Source: Discovery Trading Group morning preview, October 21 at 3:53 a.m. ET. Charts courtesy of Discovery Trading Group; click either chart to view the original.