Daily Brief - Wednesday, 3/5/25
We saw a little bit of a pop of lows of the day in yesterday's session. Was it an indication that the low 20,000's is the area of the "Trump put". All eyes will be on tariff news today.
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Upcoming News
Wednesday - 3/5/25
8:15am EST - US ADP Employment Change (Expected: 140k, Actual: 77k)
9:45am EST - US S&P Services PMI Final (Expected: 49.7)
10:00am EST - US ISM Services PMI (Expected: 53)
10:00am EST - US Factory Orders MoM (Expected: 1.6%)
Thursday - 3/6/25
8:30am EST - US Trade Balance (Expected: -92.8B)
8:30am EST - US Initial Jobless Claims (Expected: 234.5k)
Friday - 3/7/25
8:30am EST - US Unemployment Rate (Expected: 4%)
8:30am EST - US Nonfarm Payrolls (Expected: 155k)
8:30am EST - US Average Earnings YoY (Expected: 4.1%)
12:30pm EST - Fed Chairman Powell Speaks
Prior Session Stats and Analysis - Tuesday, 3/4/25
Session Open: 20,342.50
Session High: 20,732.50
Session VAH: 20,550.25
Session POC: 20,412.00
Session VAL: 20,200.25
Session Low: 20,075.25
Session Close: 20,397.50
Session Settlement: 20,399.00
Session Range: 657.25 pts, 2629 ticks
OI Change (Prelim): +7,752 (NQ) / -696 (MNQ)
Est Volume: 955,760
Prior Session Analysis
Yesterday’s session was a Normal Variation day with range extension to the upside. NQ added +7,752 contracts of new business on really high volume of over 955k contracts traded. This level of volume is 2nd only to Jan 27th when we saw a little over 1 million contracts traded.
As a heads up, we are only a little over two weeks away from expiration for the NQH25 March contract that expires on March 20th. Contract rollovers will likely start to happen at some level next week and pick up into the following week. Be prepared for this, a lot of traders sit out the contract rollover period due to the volatility and uncertainty.
We did see quite the auction up in yesterday’s session. Initial reactions were that this was a short squeeze but from my standpoint, the data does not back it up. The sisters (ES & NQ) moved in tandem once again and both added a good amount of new business with NQ at +7,752 and ES at +17,844 in new business. I have no doubt that some shorts left the market yesterday, which was part of the move up, but this could also have very likely been new longs entering based on the comments from Treasury Secretary Bessent that Trump may rollback tariffs.
This news didn’t officially hit the wire until around 4:20, but there was news leaking throughout the day that Trump was waffling on his decision due to the quick global reaction and retaliation, falling poll numbers, and the market being almost 10% off its highs since he took office. I expect we will hear more about this today, the most likely news will be the announcement of a plan for Mexico and Canada to have the tariffs lifted. This will be good news to the market.
We did see a fairly substantial selloff into the close yesterday, which was most likely profit taking due to Trump’s speech to Congress last night and the uncertainty around “will he or won’t he” retreat on tariffs. This caused NQ to close roughly in the middle of its daily range.
The only other interesting note from yesterday’s price action was once price sold off from the open, tested lower down near the 20,000 level and auctioned back up above the prior session’s low, the low and prior sessions value area low provide the edges of the range for the remainder of the day. That indicated that sentiment indicated fair value was lower than the session before, but not so low as to search for trade facilitation at levels below the prior day’s range.
You may already be hearing about the “Trump put”. In case you’re not familiar with it, what it means is the speculation of what price level does the market have to reach before buyers determine the price is too cheap and step in to buy at a discount. Alluded to this yesterday in my brief, at some point in all trends, price gets too expensive or cheap and the other side steps in strongly. Most institutions have this level at 10% off the highs, which you can see that we are very close to in NQ on the Daily chart above.
It’s all speculation at this point if a “Trump put” even exists. It remains to be seen whether Trump cares more about the market than his tariff agenda, a clear sign will be whether he does back off on tariffs based on the market’s downtrend or if he sticks to them despite the losses.
Plan for Today - Wednesday, 3/5/25
At the time of this writing, overnight inventory has been essentially flat all night, slightly above yesterday’s close around +50 points. This puts us on the path to open in-balance with yesterday’s range and value. This flat opening indicates to me that the market is awaiting further information.
ADP employment data came in at 8:15am at slightly more than half of what was expected, that is not a good sign for the economy or job growth, but is a good sign to the market for pressure on Trump with tariffs and potential Fed cuts. So far reaction to this data has been muted.
We have further data releases this morning after open, PMI data at both 9:45am and 10am, and Factory orders at 10am also. I plan to be flat before these hit the wire.
Yesterday, traders did raise the expectations around a rate cut in May to 46% and 49% in June.
You will want to keep a very close eye on the news today. Canadian PM Trudeau and President Trump are expected to speak today about tariffs. The market will be watching any tariff related news today. We could see a positive reaction from the market if more details emerge around Trump considering backing off on tariffs, an announcement occurs that details specific actions Canada and Mexico can do to have tariffs lifted, or really any news that indicates this may be short lived.
My plan for today since it appears we are opening in-balance and value will be to be patient, get through the news releases in the first half hour then evaluate the market sentiment. I will be looking for conviction in either direction and momentum based trades today that match my setups. If the market chops sideways I will sit on my hands and wait. At some point news will break that will send the market moving, the key is in being patient and waiting for that to happen.
If good news breaks and the market begins to auction up, keep an eye out for a short squeeze. We have a lot of shorts still in the market sitting on profit, it only takes a few to believe sentiment has changed and head for the door before the majority will follow.
Levels on my chart today:
21,000 - similar to yesterday, a key psychological level. I think it would take a short squeeze to get us up to this point today.
20,830 - area of support and resistance back on March 3rd.
20,732 - we saw strong rejection here yesterday as resistance late in the session’s uptrend and a selloff into close.
20,550 - yesterday’s value area high, was a level of strong support on Feb 28th, and turned into resistance yesterday and in the overnight session today.
20,325 - has served as support on March 3rd and 4th. Buyers stepped in around this area during the selloff into the close yesterday.
20,075 - 20,000 - yesterday’s low and a key sentiment area for me. If price auctions down here and breaks 20,000, there is not much past structure to give an indication of where buyers will step in.