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S&P 20%-25% Drops; The Gift That Keeps Giving
Danny Riley
May 15, 2025
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Our View
It’s all a big blur—a 20% drop in the ES and a 25% drop in the NQ, one of the most volatile stretches in history—followed by a total recovery, now not that far off new all-time highs.
Overnight, the ES traded in a very narrow range before starting to drift higher, eventually reaching 5924.50. Like I said in yesterday's OP, picking a top is one of the hardest trades to make, but I really feel that the ES and NQ are at or near a high, or due for a larger pullback.
A few months ago, after the ES made its low, Rich Miller from @HandelStats called me and said he thought there was going to be a big rally. He told me he didn’t know if we’d make new highs, but that it could get close.
Last night I talked to Rich again, and he said his work is now pointing to another big leg up—to ES 7000.00. This is not the first time he’s told me about big moves before they started. He now has over 18,000 hours of coding on the algo and has been incorporating some AI programs, which seem to have enhanced his system. He showed me the expanded stats, and the title of the query is: Post-Election Year Market Trends Since 1972.
Since the 1972 election, the stock market has ended higher in 9 out of 13 post-election years. When a Democrat won the presidency, the following year was positive 5 times and negative just once. Under Republican victories, the post-election year saw 4 gains and 3 declines.
A particularly compelling pattern emerges when we look at the May high in the post-election year: if the S&P 500's May high exceeded the prior year’s close, the market finished the year higher every time—with an average gain of 22.42%, regardless of which party was in office.
Like I said, he’s made similar calls before that have been spot on.
The ES made a triple top at 5927.00 on Tuesday and a 5925.00 high yesterday. I was trying to short the up move, tried a few times, got out, and—like clockwork—the ES sold off down to a new daily low at 5890.00 around 1:30. The trade just took too long to develop.
The ES closed up 0.09% at 5906.00. The NQ again outperformed the RTY (Russell 2000) and settled at 21,399.75, up 145 points or +0.68%. The RTY closed at 2,087.80, down 20.50 points or -0.97%.
Nvidia (NVDA) was up almost 5%, AMD (AMD) rose 4%, Alphabet (GOOGL, GOOG) was up 3%, and Super Micro Computer (SMCI) soared 15%.
In the last four sessions, the Magnificent 7’s market capitalization has increased by approximately $1.63 trillion, from May 8 to May 12, 2025. From the April 7 4832.00 low, the market cap has increased by approximately $3.29 trillion. The top 10 U.S. stocks have recovered $4.04 trillion, and the entire U.S. stock market has recovered approximately $9.81 trillion since the April 7, 2025 low, based on S&P 500 data and broader market estimates.
Look, where the ES goes from here is anyone’s guess. Is the ES still going up? It seems that way—but it really looks like there is something broken in the treasury markets. Bonds and notes have been down in 8 out of the last 10 sessions, and that definitely falls into the “I’m concerned” department.
Our Lean
Today we have an explosion of economic reports—11 in total—including Retail Sales, PPI, Industrial Production, one Fed speaker, and Fed Chairman Powell's speech at 8:30 a.m. ET.
Yesterday's big $5.7 billion to buy was part of the mid-month rebalancing (the 14th of each month). According to Goldman Sachs: The S&P Top of Book liquidity stands at $9.83mm as of yesterday’s close. This is about 9x off the April lows of $1.1mm, and now 28% above the YTD average of $7.66mm.
CTAs have added LENGTH to their positioning in US equities and have continued to buy with vigor. With the S&P more than 100 handles, here's how the flow outlook breaks down:
Over the next 1 week:
Flat tape: Buyers $20.94B ($13.61B into the US)
Up tape: Buyers $20.88B ($14.74B into the US)
Down tape: Buyers $5.47B ($7.05B into the US)
Over the next month:
Flat tape: Buyers $31.11B ($24.45B into the US)
Up tape: Buyers $36.50B ($27.43B into the US)
Down tape: Sellers $82.75B ($11.52B out of the US)
Key pivot levels for SPX:
Short term: 5610
Medium term: 5746
Long term: 5496
Our lean is the same as yesterday: buy the early pullbacks and sell the rips. If I’m right, we’ll see two days of back-and-fill (rest time) and then a rally into FRYday’s May expiration.
According to the Stock Trader’s Almanac, Friday’s expiration has the Dow up 16 of the last 24 occasions.
MiM and Daily Recap
The S&P 500 futures (ES) opened Wednesday's regular session at 5913.25 following a positive Globex session that lifted prices from 5902.00 to 5913.25 by the 9:30 AM ET open. The overnight low of 5896.25 came at 6:05 AM, while the Globex high of 5924.50 printed just before the cash session began at 8:30 AM. This initial strength set the tone for a choppy, back-and-forth day.
Shortly after the open, ES peaked at 5925.00 at 9:35 AM before pulling back into the 10:00 AM hour, marking a deeper low at 5898.75 at 10:10 AM, a 26.25-point swing off the early high. A bounce followed into 10:30 AM, topping at 5914.50, but sellers quickly regained control, driving ES to a morning low of 5892.50 by 11:05 AM.
Midday action was marked by two recovery legs: a push to 5920.75 at 12:05 PM and a second high of 5921.00 at 12:30 PM. However, neither move held. The market sold off sharply into 1:20 PM, tagging a new low at 5890.00, the weakest point of the regular session.
From there, a 27.50-point advance brought ES up to 5917.50 by 2:30 PM. But the late afternoon was marked by lower highs and continued pressure. After pulling back to 5900.00 by 2:50 PM, ES managed another minor high at 5916.50 at 3:50 PM before fading again into the close. The market settled at 5909.50 for the 4:00 PM cash close, up 6.00 handles or 0.10% from the previous day’s 5903.50 settlement. Cleanup trading from 4:00–5:00 PM drifted slightly lower, closing at 5906.00.
Wednesday’s tone was mixed and rotational, marked by strong intraday reversals and failed breakout attempts. The session lacked directional commitment, with both bulls and bears taking turns but failing to hold momentum. The largest move occurred from the 12:30 PM high to the 1:20 PM low, shedding 39 points (-0.66%) before rebounding.
Despite the intraday noise, volume held steady with 923,816 contracts traded during the regular session and 1,141,223 overall. The session closed modestly higher on a $C–C basis, with a 6.00-point gain (+0.10%) from Tuesday’s cash close, while open-to-close action saw a slight loss of -3.75 points (-0.06%).
Notably, the Market-on-Close imbalance reached a total of $5.689 billion, heavily skewed to the buy side with $7.086B to buy versus $1.396B to sell. Although the symbol imbalance was 65.7% buy—just under the 66% threshold—it leaned solidly bullish and may have contributed to the late-session bounce toward 3:50 PM.
Overall, the day concluded with modest gains and a balanced yet indecisive structure. Bulls defended downside tests, but upside progress was capped repeatedly. All eyes turn to Thursday’s session for potential directional resolution.
Technical Edge
Fair Values for May 15, 2025
S&P: 19.29
NQ: 80.43
Dow: 80.48
Daily Breadth Data 📊
For Wednesday, May 14, 2025
NYSE Breadth: 38.35% Upside Volume
Nasdaq Breadth: 64.42% Upside Volume
Total Breadth: 62.10% Upside Volume
NYSE Advance/Decline: 33.09% Advance
Nasdaq Advance/Decline: 36.86% Advance
Total Advance/Decline: 35.42% Advance
NYSE New Highs/New Lows: 56 / 26
Nasdaq New Highs/New Lows: 139 / 123
NYSE TRIN: 0.66
Nasdaq TRIN: 0.32
Weekly Breadth Data 📈
For the Week Ending Friday, May 9, 2025
NYSE Breadth: 53.95% Upside Volume
Nasdaq Breadth: 55.80% Upside Volume
Total Breadth: 55.09% Upside Volume
NYSE Advance/Decline: 58.37% Advance
Nasdaq Advance/Decline: 48.52% Advance
Total Advance/Decline: 52.23% Advance
NYSE New Highs/New Lows: 141 / 110
Nasdaq New Highs/New Lows: 256 / 303
NYSE TRIN: 0.89
Nasdaq TRIN: 0.88
Trading Room News:
Polaris Trading Group Summary: Wednesday, May 14, 2025
Theme of the Day:
A textbook example of a well-structured Cycle Day 2 with a strong AM session, focused execution around defined levels, and disciplined navigation through choppy midday conditions. Key levels such as the 5895 Line in the Sand and VWAP zones were crucial to structure. Crude oil trades delivered notable results.
Positive Trades & Highlights:
Index Futures:
Line in the Sand: 5895 was the key structural pivot. The market respected it early, setting the tone for a bullish lean.
Initial target zone (5915–5925) was hit quickly. PTGDavid noted just a 2-tick miss on ONH (5924.50).
A retest of 5895 later in the day confirmed a classic PKB (Pullback Buy) structure, with David emphasizing the "Beach Ball Effect" — buyers defending and pushing back above.
Price action aligned perfectly with DTS Briefing, showcasing predictive strength in pre-market planning.
Crude Oil (@CL):
Open Range Long strategy was a success with Targets 1, 2, and 3 all hit.
PTGDavid called it a "Spectacular Crude Oil Open Range", emphasizing its clean structure and execution.
End of Day:
MOC Buy Imbalance came in at $5.7 Billion, giving the market a bullish closing push.
Closed dead center of the range, reflecting the balanced nature of Cycle Day 2. PTGDavid praised the precision of the Delta Profile.
Lessons & Commentary:
Adaptation and Discipline:
Emphasis on not overtrading during midday CHOP. “The Chop is Real… Do not overtrade.”
Quote of the day: "Good traders survive... Great ones adapt."
Market Structure Awareness:
Traders were reminded that in order for a rally to occur, the market often needs to liquidate weak longs first — a nod to market mechanics behind the PKB structure.
Education through Charts:
David and Chief both posted annotated charts, reinforcing zone logic and trade execution rationale.
Chief’s commentary on "NEW" level (midnight open) provided useful insight into how he frames context across NQ and ES.
PTG Links to Daily Strategy, Range Calculator, and Disclaimer.
Cycle Day 2 breakdown and visual charts to support learning.
Multiple images posted showing successful setups and key inflection zones.
Key Takeaways:
Follow the strategy — The DTS Briefing called it well.
Trust structure — Levels like 5895 and VWAP (5910) delivered repeatable setups.
AM session continues to offer the cleanest trades. PM was choppy until MOC.
PKB opportunities are high-probability when structure and timing align.
Another strong day for the PTG room — full of tradeable setups, disciplined execution, and actionable educational moments.
DTG Room Preview – Thursday, May 15, 2025
Trade & Tariffs: U.S. ocean container bookings from China surged 277% last week following a temporary pause in Chinese-specific tariffs. Importers are rushing to move goods ahead of potential tariff hikes. Meanwhile, China rebuked U.S. export controls targeting Huawei’s Ascend AI chips, warning of supply chain risks.
Global Trade & Tech: President Trump, speaking from Qatar, urged Apple to ramp up U.S. production instead of expanding in India. India has reportedly offered to eliminate tariffs on U.S. goods.
Aerospace Momentum: Boeing (BA) hit 52-week highs after a record $96B order from Qatar Airways and additional orders from British Airways and AviLease. China has lifted its ban on Boeing deliveries post U.S.-China talks.
Earnings Watch: Premarket reports from BABA, DE, WMT, NTES, KE, BIRK, CPRT, NICE, SHG. After the bell: AMAT, BAP, TTWO.
Economic Calendar: Key data hits at 8:30am ET (PPI, Retail Sales, Jobless Claims, Empire State, Philly Fed), 9:15am ET (Industrial Production), and 10:00am ET (Business Inventories, NAHB). Fed Chair Powell speaks at 8:40am ET.
Market Technicals: ES tests former channel support at 5875/80s with the 200-day MA at 5875 in play. No strong whale activity noted. Volatility is down but could shift on economic data. Key support zones: 5875/80s, 5643/48s, 5270/75s.
S&P 500 — ES Futures
Calendars
Economic Calendar Today
This Week’s High Importance
Earnings:
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