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Well, this is like watching a TV rerun—the ES rallies on Globex and then gets pounded before the regular session opens. What I have been noticing is that every time the markets rally, traders get bullish and forget the overall price action which is to sell the dead cat bounces, not buy into them.

The big question today: Was yesterday the Thursday low before the expiration?

Early on, Commerce Secretary Howard Lutnick said that a one-month tariff reprieve could extend beyond just automakers. Not long after, Trump announced he would pull back some tariffs on Mexico. Later, Treasury Secretary Scott Bessent called Canadian Prime Minister Justin Trudeau a “numbskull,” warning that Trudeau’s tough stance with the U.S. could lead to higher tariffs on Canadian imports. But all of that failed to inspire the markets as the ES made new lows and the NQ closed in correction territory, now more than 10% off its closing high and down 2.61% on the day.

Am I surprised? Not at all. It seems like the White House has a total disregard for the stock market, with its constant on-again-off-again tariff rhetoric. I know Trump thinks he’s the deal-maker, but it’s not working on Canada, and it really hasn’t worked on China, which has made it clear that it will fight to the end, be it tariffs or war.

I came across an interesting piece titled “Graphic Truth: Who’s Most Vulnerable in the North American Trade War?.” The data in the article is telling: U.S. exports to Canada and Mexico make up only 1.8% of U.S. GDP. Meanwhile, Canada’s exports to the U.S. account for 19.5% of its GDP, and Mexico’s exports to the U.S. make up 25.3% of its GDP.

Clearly, Canada and Mexico have a lot more at stake. As the article notes, the situation is lopsided, but I don’t think it’s just the tariffs causing all the problems. I think it’s also Trump’s Art of the Deal playbook—and Canada and Mexico calling his bluff. Either way, the stock market hates uncertainty, and clearly there is a high level of that.

The other reason the stock market is selling off is that Biden was spending billions on just about everything trying to keep the economy rolling while inflation was rising. Now that the new administration has taken over they are reversing all of his initiatives and exposing all the waste in the government programs.

But there’s another reason that we all know, the over-investment in the ten top stocks or the “Magnificent 7” and the overspending of billions on AI. While the big firms won’t admit it, DeepSeek has helped spook the U.S. AI industry.

Economists expect job growth of 170,000 in February, up from 143,000 in January, with the unemployment rate holding steady at 4%. Goldman Sachs noted that the DOGE cuts will likely lower the headline payroll number by just 10,000 or so and expects weather-related impacts to be minimal. Overall, the bank said the current picture, according to alternative figures, is one of “a firm pace of job creation, with continued but moderating contributions from catch-up hiring and the recent surge in immigration.”

Our Lean: MrTopStep trading rules 101: If the ES is down hard on high Globex volume, I’m buying the open or the first dip after the open. I know this is a risky call given how the markets have been acting, but it’s a trade that has had good success for many years, and it has not changed. It’s a "bus too full" trade—if it works and the ES rallies, I’ll exit half the position, set a stop, and try to hold. If the ES gaps higher, I’m a seller on the open or will sell the rallies.

NVDA got down to 110.22, right at support. If it starts breaking lower, the next level of support is 90.00. In the ES, it’s all about 5700.00. Several lows were made near 5720 yesterday—if that level breaks, all hell could break loose.

MiM and Daily Recap

The ES traded in a volatile session, with significant swings throughout the day. The tail end of the Globex put in a low at 5744.25 before a rebound took the index to 5783.50 by 09:06 AM. The market opened at 5773.75 in the regular session and a sharp decline followed, reaching the low of 5753.00 at 09:42 AM, marking a -0.61% drop from the prior high. Buyers stepped in, propelling prices toward a high of 5819.75 by 10:39 AM, up 66.71 points (+1.16%) from the session low.

The momentum stalled slightly, with a pullback to 5794.00 by 10:54 AM (-0.44%) before a final morning high was reached at 5820.25 by 11:09 AM, a gain of 27.25 points. A slow grind lower followed, reaching 5790.00 by 11:27 AM (-0.54%) before another recovery led to a peak of 5823.25 by 11:30 AM. The market then shifted downward into midday, falling sharply to 5728.75 by 12:48 PM (-1.57%). A brief bounce to 5760.25 by 13:21 PM (+0.55%) was followed by a retest of the lows, with the ES printing 5720.00 at 14:27 PM (-0.70%).

In the final hours, the ES attempted a meaningful recovery, rising to 5780.50 by 14:51 PM (+0.85%), pulling back to 5723.25 at 15:00 PM (-0.78%), and then rallying to a session high of 5772.25 by 16:18 PM, marking a late-day gain of 49 points (+0.86%).

Market Sentiment and Close Analysis

Overall, the ES closed at 5747.75 in the regular session, down 26 points (-0.45%) from the open and 103.25 points (-1.76%) lower than the prior session close. Volume was significant, with 1,562,514 contracts exchanged in the regular session and just shy of 2M for the full session. The full session close of 5761.25 reflects some stabilization, but the broad decline of -1.76% highlights the persistent selling pressure.

The MOC (Market on Close) imbalance at 15:50 was a buy all the way to the close, starting at about $1B. The symbol lean remained in the high 50s—not a strong directional push but enough to sustain the rally into the close. Strong buy imbalances were seen in stocks like LOW, SNOW, and V, while heavy sell imbalances were observed in MSFT (-26.17M), COST (-39.89M), and PFE (-9.8M).

How to read the MIM

Technical Edge

Fair Values for March 7, 2025

• SP: 6.28

• NQ: 26.17

• Dow: 31.29

Daily Breadth Data 📊

• NYSE Breadth: 31% Upside Volume

• Nasdaq Breadth: 34% Upside Volume

• Total Breadth: 33% Upside Volume

• NYSE Advance/Decline: 28% Advance

• Nasdaq Advance/Decline: 32% Advance

• Total Advance/Decline: 30% Advance

• NYSE New Highs/New Lows: 30 / 83

• Nasdaq New Highs/New Lows: 54 / 193

• NYSE TRIN: 0.95

• Nasdaq TRIN: 0.91

Weekly Breadth Data 📈

• NYSE Breadth: 50% Upside Volume

• Nasdaq Breadth: 44% Upside Volume

• Total Breadth: 47% Upside Volume

• NYSE Advance/Decline: 52% Advance

• Nasdaq Advance/Decline: 35% Advance

• Total Advance/Decline: 39% Advance

• NYSE New Highs/New Lows: 119 / 232

• Nasdaq New Highs/New Lows: 213 / 680

• NYSE TRIN: 1.00

• Nasdaq TRIN: 0.91

Guest Posts:

Get instant access to our partners’ real-time market data and insights not available anywhere else. Here is last night's Founder’s note getting you ready for today’s market and explaining the constraints in yesterday’s market. - MrTopStep

What’s Happening in the Market

The indices pushed to new lows today, with SPY closing 6.7% down from all-time highs on 2/19. More significantly, QQQ hit a formal correction today by touching down on a -10% drop from highs (closing at -9.7% from highs).

There is nothing magical about that 10% figure which often marks corrections (or the -20% to enter a bear market) but it places it into perspective about how quickly things have moved. Near that QQQ top (540.81), we had first breached the VT at 530 and it has stayed breached, still locking in a negative gamma regime.

With QQQ closing at 488.20 today, it highlights the importance of why we have a “broken means broken” attitude when it comes to our critical volatility [trigger] inflection point. Prices can keep sliding until something unforeseeable happens to shift the flows, and there is no reason why SPX could not drop as low as even 4000. Put Walls offer some relief for trading setups, but once the price touches down on a Put Wall, then those [retail side] long puts mostly get rolled OTM, which mechanically keeps walking down Put Walls as the weeks pass.

Most of the damage also happened overnight, but that goes hand in hand with the sentiment of these type of conditions. What is interesting, however, about today’s session is that NDX seems to have responded to its major 20,000 round number as a bottom today: SPY -1.78%, QQQ -2.75%, MAGS -2.99%, and SVIX -10.63%!

Given the natural flow dominance of a negative gamma regime, basket flows show us how morning bullishness rolled over slowly and then went down a waterfall, with tight bearish confirmation on both sides:

And then turning to index flows for confirmation and signals, there were these two topping signals today, both which had strong confirmation. Also helping to ease the dynamic of softening the landing from the dip, index put flows spent the day rounding out at a bottom and coming up bullish on the other side:

Those same signals can be seen well in Total view (with this customized teal line) from the live gamma view.

There is also a new structural artifact for this size. After Captain Condor was blown out of that position by over 30 points today beyond the max loss mark, at 4:10pm this new strictly-call position showed up. This might generate some overhead positive gamma tomorrow and act like a mini Call Wall, otherwise, there are no signs of market liquidity until 250 point higher at 6000 SPX. 

What to Watch for Next

There is a lot going on tomorrow. In the premarket (8:30am EST), we have a major binary event with NFP, which will help to bring color to a parade of Fed speaker comments today.

Then at 12:30pm EST, Chair Powell Speaks, only to be followed up by President Trump Speaking at 1:30pm EST. No one in the world moves markets like these two and they are speaking back to back, in negative gamma! Taking in that information, and contextualizing it with the sea of negative gamma above, short calls will be exceptionally dangerous without at least partial cover from long shares.

Volatility wise, IV moved back up after that relief rally yesterday, but it takes active realized volatility and an appetite to bid voraciously on long options in order for this to sustain itself. Based on this fact, one reasonable strategic approach in these conditions could be to look for narrow credit put verticals rather than go long calls that will be fighting heavy IV crush if they are correct about direction. 

Get instant access to our partners real-time market data and insights not available anywhere else. Here is last night Founder’s note getting you ready for today’s market and explaining the constraints in yesterday’s market. - MrTopStep

Trading Room News:

Polaris Trading Group Summary - Thursday, March 6, 2025

The session opened with a cautious tone as traders awaited a decisive directional move. PTGDavid highlighted the importance of managing stops effectively and referenced a strong article on dealing with unknown outcomes in trading. The morning began with the market oscillating around the Open Range, with no clear breakout initially.

Morning Session:

• A CL OPR short trigger was called early on.

• Price action was slow, grinding, and largely two-way, making for a choppy environment.

• A VWAP Buy Response emerged, signaling that bulls were defending key levels.

• PTGDavid noted that "Bulls are not giving up the ball today," indicating some bullish momentum building.

• The A4 long trade ran well, showing a strong upward bias.

Midday & European Close:

• Market remained stuck between VWAP (5795) and Pivot (5825), forming a key "sandbox" range.

• European close brought two-way traffic, with a return to VWAP, making for a more neutral stance.

• PTGDavid noted that price action became “spunky” in the mid-zone, leading him to stand aside momentarily.

Afternoon & Late Session:

• A significant liquidation phase emerged, with prices running the range up and down.

• The Bud Fox Decision Point metaphor suggested the market was on the edge of a major move.

• Bulls failed to reclaim 5750, leading to pressure from margin clerks forcing liquidations.

• As expected, the 2 PM “Shake n Bake” brought some volatility.

• PTGDavid made it clear: “Bulls have accomplished nothing unless they can reclaim prior value.”

• The session wrapped up with a small MOC buy imbalance ($974M), hinting at some buying into the close.

Key Takeaways & Lessons Learned:

• Stop losses work – A key takeaway from early discussions was that taking small, planned losses is a part of a successful system.

• Patience is key – The market spent much of the session in a grind, reinforcing the need for discipline and waiting for clear signals.

• Know when to step aside – PTGDavid wisely stood aside when price action became unpredictable.

• Reclaiming key levels matters – The inability of bulls to retake 5750 signaled more downside pressure.

The trading day closed with a focus on tomorrow's Jobs Report, which will likely drive the next big market move. Hagee!

DTG Room Preview – Friday, March 7, 2025

• Market Recap: U.S. stock indexes hit their lowest levels since November as markets reacted to shifting policies from former President Trump.

• Tech Stocks: Marvell (MRVL) dropped nearly 19% after a disappointing sales forecast, dragging Nvidia (NVDA), Broadcom (AVGO), and AMD (AMD) lower. However, Broadcom rebounded in after-hours trading, up 14%, after strong guidance and news of AI chip development with OpenAI.

• Economic Data: Markets remain focused on weakening U.S. growth signals, with today’s key data including the February Jobs Report at 8:30 AM ET and Consumer Credit at 3:00 PM ET.

• Fed Watch: Key Fed speakers today include Bowman at 10:15 AM ET, Williams at 10:45 AM ET, Kugler at 12:20 PM and 1:00 PM ET, and Fed Chair Powell at 12:30 PM ET.

• Crypto Policy: Trump to discuss cryptocurrency regulation at a 1:30 PM ET roundtable.

• Market Dynamics: Volatility remains elevated, with the ES 5-day average daily range at 139 points. Whale activity is bullish ahead of the Jobs Report but on light overnight volume. ES held its short-term downtrend channel bottom on Thursday.

  

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Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.

Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!!

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