ES Takes a Breather After 158-Point Rally

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The ES traded in a 27-point range for most of the day until the futures traded down to a new low at 5809.25 at 2:50PM ET and later rallied up to 5829.50. But that’s not where the action was—it was in the NQ, which closed at a five-day high, up 0.70% vs. the ES’s gain of 0.28%. It looked like a rotation into the NQ and out of the YM, which gained a modest 0.06%, and out of the RTY (small caps), which closed down 0.53%.

As I said in the lean, after a 158-point rally over two days, the ES needed a rest day—and that’s what it got.

As we count down to President Trump’s April 2nd tariff deadline, the main question is: will he be naughty or nice? Or both? I think the latter, as he could also announce that new tariffs on the pharmaceutical and auto sectors are coming in the "near future." In another abrupt salvo, Trump said Monday the US would impose a "secondary tariff" on any country that buys oil or gas from Venezuela.

While the markets have rallied and I’ve changed my tune, I’m not 100% sure it’s crystal clear—but as I’ve always said, I’m not here to fight city hall and if the ES is going up or down, I want to go for the ride.

Clearly, the markets have calmed down, but the overall picture remains murky. Lower earnings and evidence that the economy is cooling were evident in yesterday’s consumer confidence number, which showed a bigger drop than economists had expected and fell to the lowest level since early 2021.

I think we all knew a sell-off was inevitable, but the big question is: can the ES and NQ keep going up while uncertainty remains high and the risk of recession continues to persist?