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Riley Retest Signals Reversal Amid Chaos
Danny Riley
April 01, 2025
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The day started out with new lows on the session, with the ES trading down to 5665.00 and printing a session low of 5333.00. It popped up to 5581, then immediately sold back off to the 5559 level. From that retest there was no looking back and rallied the rest of the day was higher highs putting in 139 points up from the low to 5672.70 by 3:44 PM.
Before that move, I posted this in the MTS chat:
IMPRO : Dboy (9:54:40 AM): too easy (to be short)
IMPRO : Dboy (9:55:35 AM): oversold, retail jumped all over this sell-off
IMPRO : Dboy (9:56:58 AM): they see all this shit on Twitter, it sells off, more people puke, hedges get put on, margin liquidation
IMPRO : Dboy (9:57:37 AM): run some buy stops now
IMPRO : Dboy (10:02:26 AM): trapped everyone short
That was the whole ball of wax right there!
I have to admit, I never thought the ES was going to rally that much. But as I’ve pointed out, this is all part of what's shaping up to be a very long run of increased volatility. Everyone has their levels. I don’t know which service had the 5533.75 early low, but I saw it — and I’ll explain how I knew.
After the ES made its low, it upticked and then made a higher low. I call this the Riley retest. You could see it on the ladder: offers in the ES and NQ had shifted, bids were larger, and offers were thinner. When you have buy stops just above and the price action flips, it changes the direction.
Here’s an update from Goldman:
Most of the selling today is concentrated in mega caps, momentum, / AI , all down about 2.5%. Non-profitable tech is down 2.8%, and high short interest is down 3.5%. So anything momentum or speculative growth is taking the brunt of the selling.
Note: XBI is down 4.5%.
There are rotations underway, and they’re what you'd expect - defensive: staples, energy, utilities, and real estate are all up around ~1%+.
The equal-weight S&P is actually positive right now, with cap-weighted down 0.65%, a very wide divergence.