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- The ES Can Rip, the NQ Can Scream — But With Crude on the Warpath, Don’t Marry the Rally
The ES Can Rip, the NQ Can Scream — But With Crude on the Warpath, Don’t Marry the Rally
Danny Riley
May 05, 2026
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Sell in May and walk away? I asked Gemini that question, and this is what it came back with:
Historically, the adage has a statistical basis, but in the modern era—and especially over the last decade—it has often been a "profitable mistake" to follow it. The strategy suggests that the market underperforms during the six-month period from May through October compared to the "Best Six Months" of November through April.
The Historical Case (1945–Present): On a long-term average, the seasonal trend is real. Since World War II:
November–April: Average gain of approximately 7%.
May–October: Average gain of approximately 2%.
Why it has "failed" recently: While the summer months are often slower, they are rarely actually negative. If you had "walked away" in May during the last decade, you would have missed out on significant growth.
Win Rate: In 9 of the last 10 years, the S&P 500 has actually posted positive returns during the May–October window.
Recent Outperformance: Since 2016, the S&P 500 has averaged a 6.9% gain during the May–October stretch, which actually slightly outperformed the 6.2% average for the November–April period.
Record Year (2025): Last year, 2025, saw the strongest "Sell in May" cycle on record, as the market rallied hard through the summer despite typical seasonal warnings.
The 2026 Context: As of May 4, the market is facing a unique set of circumstances that complicate the classic adage:
Earnings Strength: First-quarter earnings for 2026 are tracking at record profit margins, around 13.4%, providing a fundamental floor that often overrides seasonal "doldrums."
Geopolitical Factors: With the recent escalation in the Strait of Hormuz and fluctuating oil prices, many analysts argue that macro events are currently a much larger driver of price action than the calendar.
Momentum Rule: Historically, when the S&P 500 enters May with a gain of more than 4% for the year, as it has in 2026, the average return for the following six months actually rises from 2.1% to 4.4%.
Summary Table: Average 6-Month Returns:
In short, while the summer months are statistically the "weakest" on a 100-year chart, the cost of being out of the market, missing dividends and compounding, has made "Sell in May" a losing strategy for most modern investors.
Our Lean — Danny’s Trade (Premium only)
Tom Incorvia - Blue Tree Strategies
Chinks in the Armor: AAPL and NVDA Show Auction Fatigue
The broader market has relied heavily on leadership from a narrow group of mega-cap stocks. That has worked as long as those leaders continued to attract demand at higher prices. But Apple and Nvidia are beginning to show signs of auction fatigue.
This does not mean either stock is breaking down. The message is more subtle. Both have spent several months inside broad balanced distributions, both attempted upside breakouts, and both were rejected back toward prior value.
Markets often weaken first when leaders stop accepting higher prices.
Nvidia
NVDA has traded for several months inside a broad range, roughly bounded by 167–168 on the downside and 203–204 on the upside. The recent move above 203–204 tested whether NVDA could leave balance and begin a new upside auction.
So far, that attempt failed. Price advertised higher levels, but higher prices did not attract sustained demand. If NVDA cannot regain and hold above 203–204, the failed breakout remains the dominant message. Below that, 195–198 is the first area where buyers need to defend the upper portion of prior balance.
Apple
AAPL is showing a similar condition.
Apple has also spent several months inside a broad balance, with repeated defense near 245 and rejection near 279–280. Its recent attempt to trade above the upper boundary was also rejected.
For AAPL, 279–280 is now the key upside reference. Unless price can regain and hold that area, the failed breakout remains a cautionary signal. The lower boundary near 245 remains important, but the immediate message is that buyers failed again at the upper end of the range.
Broader Message
The concern is not that Apple and Nvidia are collapsing. They are not.
The concern is that two major leadership stocks both attempted to leave balance and failed. That is the chink in the armor.
Leadership does not need to break down violently to matter. It only needs to stop leading. If AAPL and NVDA are no longer accepting higher prices, the broader market may become more dependent on rotation, sector dispersion, and fewer remaining leaders.
You can purchase Tom’s Course on Volume Profile here
The ES made a low at 7113.75 on Globex, made a high at 7279.75, and opened Monday's regular session at 7250.50, down 7 points or -0.10%.
After the open, the ES traded 7242.25. It rallied 28.75 points up to 7271.00 at 10:50, then sold off 71.50 points down to 7199.50 at 12:05. From there, the ES rallied 28.75 points up to 7228.25 at 12:20. It pulled back 15.50 points down to 7212.75 at 12:50, then rallied up to 7236.25 at 1:20. The ES then pulled back to 7225.00 and rallied up to 7239.50 at 2:06. It sold off 21.25 points down to 7218.25 at 2:45, traded up to 7231.50 at 3:22, and chopped in a 2-point range.
The ES traded 7230.50 as the 3:50 cash imbalance showed $3.4 billion for sale, then traded 7231.00 on the 4:00 cash close.
After 4:00, the ES traded down to 7222.75 and settled at 7225.25, down 32.75 points or -0.45%. The NQ settled at 27,743.00, down 92.75 points or -0.33%; the YM settled at 49,079.00, down 567 points or -1.14%; and the RTY settled at 2,803.10, down 16.20 points or -0.57%.
Gold (GC) traded down to 2,532.40, down 112.10 points or -4.24%, while crude oil (CLM) traded up to 107.46 and settled at 105.14, down 1.28 points or -1.20%.
In the end, despite the positive statistics for the 2nd trading day of May, I was right to be skeptical about the ES being overextended and the Middle East war risk. In terms of the ES's overall tone, I think it reacted in kind to the headlines. In terms of the ES's overall trade, volume was higher on Globex and the day session at 1.553 million contracts traded.
I learned a long time ago that when you brag or talk about how good you called it, it blows up in your face; therefore, I am not going to tell you I told you so. What I can say is that a large percentage of yesterday's Opening Print’s View and Lean worked.
What I can also tell you is that I got short of the ES near the highs and put in a tight stop, walked out, and saw on my phone that the ES sold off hard and thought I had a winner going, but actually got stopped out just a few points off the high of the day.
One of my weaknesses is that when the ES goes my way, I lower the stops; had I put it above 7280.00, where I thought the resistance was, I would not be writing about this. Either way, I had a feeling the Middle East headlines would start to crank up, and they did.
On Tap Today:
8:30 am: U.S. trade balance
9:45 am: S&P final U.S. services PMI
10:00 am: Job openings, new home sales (incl. delayed), ISM services, Fed Vice Chair Michelle Bowman speaks
12:30 pm: Fed Gov. Michael Barr speaks
After the bell: Advanced Micro Devices (AMD)
Market-on-Close Recap
The Market-on-Close imbalance opened with a heavy sell tone and never really lost that character. At 15:50, the total imbalance showed -$1.479B, with only $94M to buy against -$1.574B to sell. That produced a very aggressive -94.3% dollar lean and a -78.0% symbol lean, signaling a broad wholesale sell program right from the first snapshot.
The imbalance expanded sharply at 15:51 to -$3.354B, with $1.689B to buy versus -$5.043B to sell across 756 symbols. From there, the sell side stayed dominant but gradually transitioned lower in absolute size. The total moved from -$3.142B at 15:53 to -$1.506B at 15:56, then eased further into the close, finishing near -$886M at 16:01. The final dollar lean remained heavy at -79.1%, while the symbol lean closed at -66.5%, still right on the edge of wholesale selling.
Sector action was overwhelmingly negative. Communication Services was the most extreme, showing -$636.44M with a -95.4% dollar lean and -65.2% symbol lean. Energy was also deeply offered at -$200.60M with a -93.3% dollar lean. Consumer Discretionary posted -$547.98M and a -87.6% lean, while Information Technology was the largest dollar drag at -$1.022B, with -$1.407B to sell against $385.18M to buy. Materials, Real Estate, Consumer Staples, and Utilities all showed notable sell pressure beyond the -66% threshold. Financials were just under that wholesale line at -65.4%, but the dollar total was significant at -$341.04M.
On the symbol side, the largest sell imbalances were concentrated in mega-cap growth: AMZN, NVDA, GOOG, AAPL, META, MSFT, AVGO, TSLA, and AMD all appeared on the sell list. Financials also saw meaningful selling in BRK.B and JPM. The buy side was more selective, led by BAC, GLW, WFC, RTX, LLY, LRCX, ABBV, PH, IBM, and JNJ.
Overall, this was not a balanced or rotational close. The MOC opened as a strong sell program, briefly peaked in size at 15:51, and then transitioned into a smaller but still distinctly bearish close.l.
You can watch this week’s events on YouTube or inside the Pit Room. |
Technical Edge
Fair Values for May 5, 2026:
SP: 25.96
NQ: 119.81
Dow: 105.5
Daily Market Recap 📊
For Monday, May 4, 2026
• NYSE Breadth: 36% Upside Volume
• Nasdaq Breadth: 52% Upside Volume
• Total Breadth: 46% Upside Volume
• NYSE Advance/Decline: 28% Advance
• Nasdaq Advance/Decline: 41% Advance
• Total Advance/Decline: 36% Advance
• NYSE New Highs/New Lows: 111 / 39
• Nasdaq New Highs/New Lows: 309 / 108
• NYSE TRIN: 0.71
• Nasdaq TRIN: 0.63
Weekly Breadth Data 📈
For Week Ending Friday, May 1, 2026
• NYSE Breadth: 54% Upside Volume
• Nasdaq Breadth: 54% Upside Volume
• Total Breadth: 54% Upside Volume
• NYSE Advance/Decline: 54% Advance
• Nasdaq Advance/Decline: 53% Advance
• Total Advance/Decline: 53% Advance
• NYSE New Highs/New Lows: 317 / 80
• Nasdaq New Highs/New Lows: 651 / 340
• NYSE TRIN: 1.00
• Nasdaq TRIN: 0.97
ES & NQ Levels (Premium only)
Economic Calendar
Today’s S&P500 Earnings: 31
Polaris Trading Group Summary - Monday, May 4, 2026
Opening Framework
David began the day by reviewing the overnight Globex action.
Price had declined overnight.
The move fulfilled the DTS Briefing’s lower targets.
Responsive buyers appeared near the lows.
Price recovered much of the overnight decline before the regular session.
David described the overnight move as another typical Sunday night Globex “game play.”
Cycle Day 1 Setup
The day was framed as a Cycle Day 1 session.
Key levels from the morning briefing:
7217–7219: Money Box Violation Zone
7255: Cycle Day 1 Line in the Sand
7299: Friday excess high / DTS target
7240: Later became near-term resistance
The main early question was whether bulls could reclaim and hold above 7255. David noted that a clean reclaim would increase the odds of additional upside.
Early Market Tone
Bulls struggled early.
The room noted that bulls were losing control.
Price could not sustain a strong bid above the 7255 Line in the Sand.
NQ showed relative strength compared with ES.
RUT tested its overnight high, but ES remained more pressured.
The early tone was cautious rather than aggressively bullish.
Midday Shift: Bears Take Control
By late morning, David pointed out that the market was retesting the lower D-Level / Money Box Zone, which had been discussed in the briefing.
Once price failed to hold higher levels, the tone shifted.
Important bearish markers:
7240 became near resistance
Bears had “ball control” below 7240
Bulls failed to sustain above 7255
Friday’s 7299 excess high remained firmly in place
David then identified deeper downside targets:
7210
7204
7190
This gave the room a clear downside roadmap.
News Risk and Market Reaction
A major theme of the session was geopolitical risk.
The room discussed reports involving:
UAE air defenses responding to missile threats
Iran launching cruise missiles toward UAE territory
Brent crude surging above $114
Increased military activity in the Middle East
Concern that ceasefire negotiations could be disrupted
David reminded the room that the Middle East is always a “wild-card.” He noted that markets appeared to be liquidating first and assessing the damage later.
Trading Bias: Sell Rips
The most important trading adjustment came after bulls failed at the Line in the Sand.
David stated that the shift was now in favor of:
Selling rips
Watching for long liquidation breaks
Respecting downside continuation potential
Avoiding the assumption that buyers would quickly regain control
This was a key lesson for the day: once the market failed to reclaim the critical level, the trade plan had to shift from recovery potential to sell-side rhythm.
Afternoon Action
In the afternoon, bears continued to defend the important resistance zone.
Key afternoon observations:
Bulls attempted to clear VWAP / 7240.
Bears continued to push back.
Market rhythm shifted back to the sell side.
David warned of potential deeper downside into the final segment of the session.
The closing imbalance supported the bearish tone, with David reporting a large $2.3 billion MOC sell-side imbalance near the close.
Positive Trades and Opportunities
The best opportunities came from respecting the sell-side shift.
Strong trade ideas included:
Avoiding longs when 7255 could not be reclaimed
Treating 7240 / VWAP as resistance
Selling failed rallies beneath 7240
Using the downside targets at 7210, 7204, and 7190 as reference points
Staying alert to headline-driven volatility rather than fighting it
Even though David said it was “not very profitable” on his end, the room still had a valuable directional framework. The positive result was the quality of the read: the important levels were identified early, and the bearish transition was clearly explained.
Discovery Trading Group Room Preview – Tuesday, May 5, 2026
Market focus: US/Iran ceasefire risk, the AI trade, and corporate earnings.
Middle East tensions: US equities sold off Monday as renewed US/Iran tensions raised concerns the ceasefire may be breaking down. Oil spiked Monday but has eased overnight.
AI/chip headlines: Apple is reportedly exploring US chip production options with Samsung and Intel as alternatives to TSMC, though concerns remain around US manufacturing reliability and scale.
Palantir: PLTR posted strong Q1 results, with revenue up 85% and US commercial/government demand doubling over the past year. Shares are slightly lower after earnings.
Today’s macro focus: ISM Services PMI and JOLTS Job Openings at 10:00am ET. Also on deck: Trade Balance, S&P Global Services PMI, delayed New Home Sales, and Fed speakers Bowman and Barr.
Volatility: ES 5-day average daily range rose to 79.25 points, keeping volatility elevated.
Whale bias: No clear overnight bias, with large trader volume light and mixed.
ES technicals: The intermediate uptrend channel support held Monday and remains key around 7227/30s. Bulls have room toward 7327/30s, while bears may target 7166/69s. The 50-day MA remains above the 200-day MA, keeping the MA bias bullish.
Potential resistance: 7327/30s
Potential support: 7227/30s, 7166/69s, 6969/74s
