Daily Brief - Tuesday, 5/27/25
Tariff Delay Sparks Overnight Rally — Market Pops on Hope, But Will It Hold or Fade?
Disclaimer
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.
Catch me on Twitter @TheShmuts during the day covering the session as it develops.
News Docket
Tuesday - 5/27/25
8:30am EST - US Durable Goods (Expected: -7.8%)
10:00am EST - US CB Consumer Confidence (Expected: 87.1)
Wednesday - 5/28/25
2:00pm EST - FOMC Meeting Minutes
Thursday - 5/29/25
8:30am EST - US Initial Jobless Claims (Expected: 230k)
8:30am EST - US GDP QoQ 2nd Estimate (Expected: -0.3%)
Friday - 5/30/25
8:30am EST - US PCE Price Index YoY (Expected: 2.2%)
8:30am EST - US PCE Price Index MoM (Expected: 0.1%)
8:30am EST - US Core PCE Price Index YoY (Expected: 2.5%)
8:30am EST - US Core PCE Price Index MoM (Expected: 0.11%)
8:30am EST - US Consumer Spending MoM (Expected: 0.2%)
10:00am EST - Univ Michigan Sentiment Final (Expected: 51)
Prior Session Analysis - Friday, 5/23/25
Session Stats
Open: 20,849.00
High: 21,083.00
Low: 20,822.50
Close: 20,978.50
Settlement: 20,975.00
Range: 260.5 pts (1042 ticks)
Volume (Est.): 529,692
Open Interest (Prelim, NQM5): -4,423
Value Area (Market Profile)
Value Area High (VAH): 21,050.00
Point of Control (POC): 20,955.00
Value Area Low (VAL): 20,929.50
Prior Session Breakdown - Market Profile and NY Session
Market Profile View – 30-Min Chart
Friday’s session was a Normal Variation day with range extension to the upside that couldn’t hold into the close. While the day began with a sharp gap down — roughly 263 points below the prior range — buyers responded quickly and were largely in control for most of the session.
The gap was never filled but came within ~45 points of doing so, and despite that, price managed to stay above VWAP for most of the day. Notably, price broke and held above the psychological 21,000 level for a solid three hours in the afternoon.
Only in the final 10 minutes of the session did price fall back below 21,000 — a move that appeared more like profit taking than aggressive selling.
Structurally, the session showed balance with a slight bullish tilt, though the inability to fill the gap suggests lingering caution. While we did see excess at the bottom of the profile with a single-print buying tail, there were no clear signs of trend exhaustion, just a steady drift higher.
5-Minute Chart Breakdown – NY Session
The 5-min chart confirms the slow and steady nature of Friday’s price action. No clean momentum bursts, and not much opportunity for intraday range trades either — this was a slow grind session. The drift above VWAP through the afternoon was orderly and persistent, with only the late-day fade offering any hint of urgency.
That final dip below 21,000 didn’t break structure, but it’s worth watching if it turns into something more meaningful to start the week.
Volume & Participation
Open Interest: -4,423 — A notable decline in business; likely closing shorts, but difficult to confirm
Volume: ~529k — Inline with recent averages
Range: 260 pts — Tight for NQ, limiting intraday profit potential
Final Thoughts
Friday lacked momentum, but buyers clearly had control for most of the session. The loss of business suggests positioning may be shifting, possibly in anticipation of next week’s headline risk. The drift higher without strong follow-through keeps things in balance for now, but watch for a break — compression like this doesn’t last forever.
Market held up well after a tough open — but conviction still seems soft. That could change fast next week.
Today’s Analysis – Tuesday, 5/27/25
Market Context
Overnight inventory is very long, with price trading roughly +320 points above Friday’s settlement and about +217 points above Friday’s range. The catalyst? Another unexpected move from Trump — this time delaying the EU tariffs until July 1st, reversing the stance he took just last week.
This kind of off-the-cuff tariff policy is unfortunately becoming the norm, keeping markets constantly on edge. Whether this delay is genuine or part of another negotiating tactic is unclear, but for now, the market is responding with optimism.
From a purely technical standpoint, Friday’s low bounced off the 200-day MA, aligning with the broader narrative that last week’s move was a healthy pullback within a higher timeframe uptrend. Zooming out, you’d likely assume this bounce is simply a continuation of the rally that began in late April — and that may not be far from the truth.
Importantly, the recent pullback has improved the underlying market structure, providing firmer levels to work with after the fast and thin rally earlier this month.
Bias & Mindset
Bias: Neutral
Even with this strong overnight move, I’m approaching today with an open mind. This pop is driven more by hope and headlines than fundamentals. The dollar continues to weaken, which is inflationary, and that’s worth keeping an eye on.
With such a large gap up, we could either see continuation higher or a full gap fill. It’s a coin flip. That’s why I’m focused on price action rather than prediction.
On gap days like this, my focus is:
ORB long in the direction of the gap
Failed gap fill long, if sellers can’t push it
Pullback buys, as long as we remain above Friday’s range
I’m not looking to short unless price fills the entire gap back to 21,083 — and even then, only if structure and order flow support it.
Key Levels I’m Watching Today
Upside:
22,260 — Weekly Kickoff High (likely not in play today)
22,000 — Major psychological level
21,530 — Last week’s high; rejected multiple times, key resistance
Downside:
21,320 — S/R level from last week
21,170 — Support on Friday and in overnight action
21,065 — Prior support level last week
21,000 — Psychological magnet; always on the radar
Final Note on Today
Today’s action is being driven by headlines, not fundamentals. That doesn’t mean you ignore the move — it just means you trade what you see, not what you want. Stay objective, stay nimble, and be prepared for either scenario: a gap-and-go continuation or a sharp reversion if confidence fades.
Strong overnight rally off a delayed tariff — but it’s still a hope-driven bounce. Follow the order flow, not the hype.
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