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Trading Through Tariffs: May’s Final Week Setup
Danny Riley
May 27, 2025
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Our View
Part A - Friday’s Markets
On Friday morning at 7:00 AM, the ES, NQ, YM, and RTY futures were all FLAT LINE. With 44 million people traveling for the Memorial holiday, that was a good sign for the start of a quiet three-day weekend.
At 7:19 AM, the ES fell from a high of 5872.00 all the way down to 5756.50—a 121.5-point drop from high to low—after Trump announced a 50% tariff on EU imports, citing “stalled trade negotiations.”
Sorry about my French, but I made this post on Twitter after the drop.
$ES $NQ $YM $RTY #0ODT @MrTopStep
The markets were flat line. It looked like a quiet day, but #Trumpster can’t keep his mouth shut even going into a holiday weekend. We need a doctor to prescribe him some Xanax. WTF.
Just before the 9:30 ET regular session open, I bought 1 ES.
IMPRO: Dboy : (9:27:24 AM): the ES traded 5884.00 on the open, down 74.50 points or -1.29%.
I know some people do not believe in the conspiracy theory, but let’s put this in chronological order: the ES traded up to 5995.00 in the final hour of trade on Thursday, reversed in the final minutes of the day and fell 40 pts into the close, bounced a little on Globex, and then Trump pulled this.
Thursday’s selloff into the close was Part 1 of the front-run, and Friday’s morning post as Trump’s EU tariff warning was Part 2.
The ES shook off the headline on the open and rallied up to 5843.75, then dropped 43 points down to the 5800 level and was trying to stabilize around 5814, as the 3:50 NYSE imbalance showed $1.2 billion to sell.
I know people think I’m crazy, but this is where the next fix showed up. The ES rallied up to 5817.00 and settled at 5814.75.
There are four trading sessions left in May. Sometimes, shortened weeks can be volatile because so much is crammed into four days. The week ahead has 12 economic reports, 8 Fed speakers, including Wednesday’s May Fed minutes, and the PCE number on Friday.
Part B - Monday Night
Fast forward: After a May 25 phone call with European Commission President Ursula von der Leyen, Trump backtracked from the June 1 EU tariff deadline, extending it to July 9 to allow more time for negotiations. This decision restored a 90-day pause on higher tariffs, keeping the baseline tariff on EU imports at 10%.
Sunday night, the ES Globex opened at 5820, traded 5813.00, and then exploded higher, making a high at 5895.00. It closed at 5983.50, up 1.09% at 3:30 AM Monday, and reopened at 6:00 PM Monday night at 5889.00. It made a higher low at 5893.00 and sold off down to the 5873 area at 8:33.
Guest Video - Lindsay Duff - Responsible DayTrading
MiM and Daily Recap
ES Market Recap — Monday (Shortened Session; Memorial Day Observed)
Intraday Recap
Monday’s ES futures session was notable for its shortened schedule and absence of underlying cash equity market activity due to Memorial Day. Although the regular session officially opened at 9:30 AM ET, U.S. stock markets remained closed, resulting in minimal cash market volume and futures serving as the sole price discovery mechanism.
The overnight Globex session set the tone with a robust rally from 5820.00 up to a high near 5895.00, reflecting strong relief following President Trump’s announcement to delay tariffs on Europe until July 9. Futures maintained much of this strength during the shortened cash hours.
Intraday price swings included an early high of 5892.25 at 8:21 AM, a low near 5871.00 around 11:06 AM, and a recovery to 5891.00 by the 1:30 PM early session close. The final settlement was 7.50 points (0.13%) above the open and 74 points (1.27%) higher than the prior Friday’s cash close. Total volume remained light at 36,684 contracts, typical for a holiday-thinned session.
The lack of cash market participation meant the futures market absorbed most trading interest, resulting in wider price fluctuations and the predominance of overnight Globex gains.
Market Tone & Notable Factors
The session carried a cautiously bullish tone fueled by tariff relief optimism and the compressed trading hours. The absence of cash market liquidity limited extended price trends, producing a contained range and lighter volume.
As the MOC imbalance data available is from last Friday, no specific Market-on-Close imbalance figures apply to Monday’s session. However, the steady close above prior levels amid low volume suggests buyers maintained control through the shortened day.
Looking ahead, the strength seen in overnight Globex and Monday’s futures session provides a positive backdrop for the full return of cash equity trading on Tuesday, although caution remains warranted given the ongoing geopolitical uncertainties.
Technical Edge
MrTopStep Levels:
Fair Values for May 27, 2025:
SP: 12.93
NQ: 52.73
Dow: 63.97
Daily Market Recap 📊
For Friday, May 23, 2025
• NYSE Breadth: 46% Upside Volume
Nasdaq Breadth: 44% Upside Volume
Total Breadth: 45% Upside Volume
NYSE Advance/Decline: 44% Advance
Nasdaq Advance/Decline: 41% Advance
Total Advance/Decline: 42% Advance
NYSE New Highs/New Lows: 48 / 47
Nasdaq New Highs/New Lows: 74 / 109
NYSE TRIN: 0.85
Nasdaq TRIN: 0.85
Weekly Breadth Data 📈
Week ending Friday, May 23, 2025
NYSE Breadth: 39% Upside Volume
Nasdaq Breadth: 50% Upside Volume
Total Breadth: 46% Upside Volume
NYSE Advance/Decline: 19% Advance
Nasdaq Advance/Decline: 34% Advance
Total Advance/Decline: 28% Advance
NYSE New Highs/New Lows: 156 / 97
Nasdaq New Highs/New Lows: 312 / 244
NYSE TRIN: 0.36
Nasdaq TRIN: 0.49
Trading Room Summaries
Polaris Trading Group Summary - Friday, May 23, 2025
Overview:
This “Capital Preservation Friday” in the PTG room was guided by caution ahead of the Memorial Day weekend, with significant macroeconomic developments influencing the market. PTGDavid set a conservative tone early, anticipating volatility due to a recent Moody’s debt downgrade, a weak 20-year bond auction, and escalating tariff threats from former President Trump targeting Apple (25%) and Europe (50%). These developments led to an early futures sell-off, but the day evolved into a valuable educational session with some technical trades discussed.
Key Events and Highlights:
Market Context:
Traders were advised to preserve capital and manage risk carefully.
The sharp drop in equity futures was linked to geopolitical tension and macro headlines.
The day’s narrative centered on whether the market would continue lower or consolidate within a larger uptrend.
Technical Action:
ES tagged the 5755.61 violation level early on.
A notable learning moment emerged as participants discussed ATR bull signals despite conflicting background color conditions. David clarified the signal mechanics, enriching trader understanding.
ORTs were mentioned as "long" around 9:36 AM, and David noted a “long lean until bear shift,” suggesting minor upside opportunities for nimble traders.
Trader Engagement & Learning:
A lively discussion around chart signals, tick bars, background colors, and the cumulative tick’s behavior provided significant educational value.
Participants appreciated the ongoing guidance, with several noting improved clarity using red/white tick bars.
A quote-laced Pink Floyd reference brought humor and community engagement to an otherwise cautious session.
Positive Trades & Lessons:
Trade Setup Recognition: Traders discussed signals like the ATR bull and noted ORT setups, showing progress in interpreting chart cues independently.
Chart Navigation: Members shared preferences and tweaks (e.g., bar color adjustments) to make signals clearer and align with personal strategies.
Risk Awareness: PTGDavid emphasized capital preservation, a crucial reminder heading into a long weekend amid uncertain macro conditions.
Cumulative Tick Observation: John B raised a thoughtful question about negative tick with rising prices, sparking insightful conversation about market internals.
Wrap-Up:
PTGDavid exited at 11:00 AM with the famous “Elvis has left the building” image, leaving traders with clear charts and sound strategy reminders. The room remained active post-Dave, with members continuing to share levels and thoughts. A strong session for education, community, and thoughtful market navigation—perfectly aligned with a “Capital Preservation” theme.
Discovery Trading Group Room Preview – Tuesday, May 27, 2025
Geopolitics & Policy:
Markets reacting to Trump’s threat to raise EU tariffs to 50%; action delayed until at least July 9.
His pending tax bill and concerns over rising deficits are driving Treasury yields higher; 30-year yield near 2007 highs.
Earnings Highlights:
Nvidia (NVDA) reports Wednesday, marking the unofficial end of Q1 earnings season (93% of S&P 500 reported).
Premarket: AutoZone (AZO), PDD, Bank of Nova Scotia (BNS).
After-hours: HEICO (HEI), OKTA.
Notable Company Moves:
Tesla (TSLA) European sales down 49% YoY, fourth consecutive monthly decline amid growing competition from Chinese automakers.
Macro Data to Watch:
Today: Durable Goods Orders (8:30am ET), HPI & S&P/CS Composite-20 HPI (9:00am ET), CB Consumer Confidence (10:00am ET).
Friday: PCE Index (Fed’s preferred inflation measure); June release will reflect tariff impact.
Market Technicals:
ES 5-day average range up to 91 points following Friday’s volatility.
No significant overnight whale activity.
ES held above its short-term uptrend channel over the weekend—a bullish signal.
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