Daily Brief - Monday, 5/5/25

Overnight weakness and soft structure put bulls on notice — watch for a gap failure and stay nimble around key data drops.

May 05, 2025

This publication and its authors are not licensed investment professionals. Nothing posted on The Shmuts blog should be construed as investment advice. Do your own research.

News Docket

Monday - 5/5/25

9:45am EST - US S&P Services PMI Final (Expected: 51.2)
10:00am EST - US ISM Services Final (Expected: 50.3)

Tuesday - 5/6/25

8:30am EST - US Trade Balance (Expected: -136.7B)
8:30am EST - Canadian Trade Balance (Expected: -1.6B)
4:15pm EST - AMD Q1 2025 Earnings

Wednesday - 5/7/25

10:00am EST - Treasury Secretary Bessent testifies to House Panel
2:00pm EST - FOMC Rate Statement
2:00pm EST - US Interest Rate Decision (Expected: 4.5%)
2:30pm EST - FOMC Press Conference w/ Chair Powell

Thursday - 5/8/25

8:30am EST - US Initial Jobless Claims (Expected: 230k)

Prior Session Stats & Analysis - Friday, 5/2/25

Session Stats

Open: 20,091.00
High: 20,276.75
Low: 20,019.75
Close: 20,185.75
Settlement: 20,195.25
Range: 257 pts (1,028 ticks)
Volume (Est.): 518,760
Open Interest (Prelim, NQM5): +8,389

Value Area (Market Profile)

Value Area High (VAH): 20,250.00
Point of Control (POC): 20,174.75
Value Area Low (VAL): 20,149.75

Market Profile View – 30-Min Chart

Friday was a Normal Variation Day with upside range extension, followed by a late-session pullback toward the middle of the range.

Buyers controlled the session early, driving price methodically higher.
However, around 1:00 PM, sellers pushed back at the 20,260 zone, creating a clear resistance ceiling.
Despite multiple attempts, buyers were unable to break above that level for the rest of the session.

Importantly, we saw another upward rotation in both the POC and value area — making it 7 out of the last 8 sessions where value has shifted higher, a strong indicator that buyers still have control of the broader structure.

5-Minute Chart Breakdown – NY Session

Price opened in-balance, but near the top of Thursday’s range, continuing the recent trend of indecisive opens.
Around 10:00 AM, price auctioned above and held VWAP, which acted as solid intraday support on multiple retests.
The session featured a grinding upward trend, lacking strong momentum, but still directional — until price hit the 20,260 area.

That 20,260 level served as a firm lid, with sellers holding it throughout the afternoon. Buyers didn’t give up easily, but the push lacked follow-through.

Volume & Participation

Open Interest: +8,389 — solid inflow of new business
Volume: ~518k — light, especially compared to the prior 3 sessions
Range: 257 points — tight session with limited momentum trading opportunities

Final Thoughts

Friday’s session reinforced the broader bullish control, but also exposed hesitation at higher prices, particularly around the 20,260 level.

Buyers continue to dominate the migration of value, but the decline in volume and momentum into resistance suggests this move may be losing steam. To push higher, the market may now need a catalyst or fresh narrative.

So — is this market setting up for a true breakout, or a pause… maybe even a pullback?

My view: we’re more likely to stall than break.

Why? Because what we’ve witnessed over the last week appears to be a massive short squeeze — not a conviction-based rally.

Here’s the tell:
Options flow in SPX and SPY supports this view. The data shows that traders who had loaded up on protective puts when volatility spiked have spent the past 8 sessions unwinding those positions.

That process forces market makers to buy stock to adjust (or “unwind”) their delta hedges — which were originally short due to those put sales. That mechanical buying pressure has fueled much of the recent move higher.

But here's the key point:

We're not seeing new long call positions being opened.
In SPY, there's almost no long gamma on the board.

That’s a red flag for bulls hoping this move has legs. Without fresh upside participation or positioning, the rally lacks follow-through fuel — and may be running on fumes.

Pre-Market Plan – Monday, 5/5/25

Market Context

As of this writing, overnight inventory is quite short, with price trading roughly 200 points below Friday’s settlement and sitting just under the key 20,000 level.

We are currently set to open out-of-balance to the downside, with a small gap forming ~20 points below Friday’s range low. Even if that gap fills during the pre-market session, we’re still likely to open near the bottom of Friday’s range — a zone that demands caution and close monitoring off the open.

📌 Data Reminders:

9:45 AM ET: S&P Services PMI (Final)
10:00 AM ET: ISM Services PMI

These reports hit shortly after the open — and when data lands this close to RTH, it often catches traders off guard. These events can suddenly spike volatility, so it’s wise to be flat ahead of the releases or at least ready for sharp movement.

🗓️ Looking Ahead: FOMC This Wednesday

Keep in mind that the FOMC meeting is this Wednesday. While the market doesn’t expect a rate change, Powell’s press conference and tone will be heavily scrutinized.

Historically, we tend to see choppy, low-conviction price action in the days leading into FOMC — often marked by tight ranges and a lack of follow-through.

So don’t be surprised if we see a cooldown in directional movement between now and Wednesday’s announcement.

Bias & Mindset

Bias: Neutral → Bearish

While the last 8 sessions have provided strong momentum opportunities, I continue to believe this rally lacks a solid structural foundation.
It has the look and feel of a short squeeze, not a conviction-based rally — and that means the downside risk is elevated, especially if negative news hits the tape.

Trading Plan:

If we open with a gap down:
- I’ll look for an Opening Range Breakout (ORB) trade in the direction of the gap
- I’ll also watch for signs of a gap fill failure
If neither setup develops, I’ll shift focus to momentum trading opportunities, especially where order flow shows strong conviction from other timeframe participants

Key Levels I’m Watching Today

Upside:

20,895.00 — Major resistance zone from late Feb / early March
20,530.00 — Weekly Kickoff High
20,350.00 → 20,480.00 — Prior resistance cluster from late March
20,260.00 — Friday’s session high; sellers stepped in hard here
20,000.00 — Psychological level; also just below Friday’s VAL

Downside:

19,710.00 — Thursday’s pullback zone and late-day bearish spike area
19,470.00 — Weekly Kickoff Low
19,275.00 — Strong support from last Wednesday (April 30th); untested since

Final Note on Today

We’re coming into the week with a market that’s elevated, sentiment-heavy, and potentially fragile.
With price now probing below 20,000 and opening out-of-balance, my edge today lies in patience, sharp reaction to price structure, and close attention to news and flow.

If it’s a clean momentum day, I’ll be ready.
If not, I’ll wait it out. No need to force trades on a Monday — especially not in this market.

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