Daily Brief - Wednesday, 5/21/25
Overextended Meets Overdue — Bears Get Their Shot This Morning
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
This week has a very light economic calendar but there is a barrage of Fed speakers throughout the week. Tuesday, 5/20 is the heaviest day with 6 Fed governors set to speak at various times.
Thursday - 5/22/25
8:30am EST - US Initial Jobless Claims (Expected: 230k)
9:45am EST - US S&P Services PMI Flash (Expected: 51)
9:45am EST - US S&P Manufacturing PMI Flash (Expected: 49.9)
10:00am EST - US Existing Home Sales (Expected: 4.1M)
Prior Session Stats & Analysis - Tuesday, 5/20/25
Session Stats
Open: 21,413.00
High: 21,474.25
Low: 21,298.00
Close: 21,447.50
Settlement: 21,447.25
Range: 176.25 pts (705 ticks)
Volume (Est.): 438,452
Open Interest (Prelim, NQM5): -2,846
Value Area (Market Profile)
Value Area High (VAH): 21,449.75
Point of Control (POC): 21,424.75
Value Area Low (VAL): 21,350.25
Prior Session Breakdown - Market Profile and NY Session
Market Profile – 30-Min View
Tuesday was a Neutral Day, with range extension on both sides of the initial balance. The value area and POC both rotated down yesterday. It was also a rotational day in terms of price action.
The IB was small (~100 pts) and held until nearly 1pm.
Price finally broke the IB to the upside, briefly, but was rejected softly near 21,470 — the prior session’s POC.
The rejection didn’t feel aggressive — buyers simply stopped showing up. The tape backed this up.
After buyers faded, sellers auctioned price below the prior VAL, signaling a shift in perceived fair value.
Price broke below VWAP around 2:15pm, setting up one of the better momentum trade windows of the day.
The downside auction found strong buyers at 21,345 — a key level called out in Tuesday’s brief, where sellers had emerged in the Monday’s buying tail.
After a ~30-minute battle, sellers briefly broke it, but that push became an exhaustion candle and the low of the day.
From there, buyers stepped in with conviction, launching a fast, clean move back toward the prior session’s VAL.
This late-session rally was the best opportunity of the day, with minimal chop and fast follow-through — “get on the train and ride.”
NY Session – 5-Min Chart View
The first half of the day was choppy with slow tempo, no clean setups
Best moves came after 2:15pm, starting with the VWAP break lower
The late-day reversal gave strong momentum upside with less friction than the auction down
Days like this test your discipline. The market gave nothing until the last two hours — and those who forced trades earlier likely paid for it.
Volume & Participation
Open Interest: -2,846 — fourth straight session of lost business. Most likely longs exiting. If new buyers don’t step in soon, that could be a signal the rally is losing steam.
Volume: ~438k — average for NQ. Importantly, business is leaving on low volume. That’s not panic — just quiet repositioning.
Range: 176 pts — tight range; very few opportunities and required patience
Final Thoughts
The tape continues to show:
Exits, not panic
Weak but still present bid support
A rally that wants to continue but needs fresh commitment
Don’t chase slow tape. Don’t confuse chop with opportunity.
If you’re disciplined, the real trades eventually show up — like they did in the final hour.
Pre-Market Plan – Wednesday, 5/21/25
Market Context
Zoomed-Out View — NQ Daily Chart
Even for intraday traders, it pays to zoom out. On the daily chart, we can see this rally was parabolic, and it’s now pulling back in a way that looks orderly — not panicked.
Ignore the media noise — this looks like a healthy retracement, not a breakdown. In any trend, you’ll get these digestion phases:
Some participants take profits
Others look for a better entry price
Unless we see a clear shift in sentiment or macro conditions, I’m treating this as a pullback within a broader uptrend.
Bias & Mindset
Bias: Neutral → Bearish
Wait — bearish? After just calling it a healthy pullback?
Yes. I’m bearish in the short-term, bullish in the long-term — and that framing is critical today.
As of this writing, overnight inventory is short, trading ~155 points below yesterday’s settlement and just below the prior day’s range. That sets us up to open out-of-balance to the downside.
This puts my primary focus on short setups early, especially if sellers show conviction.
If we open out-of-balance, my go-to setups will be:
ORB in the direction of the gap
Or a failed gap fill → short setup
If we somehow open in-balance, I’ll shift into patience mode, just like I did yesterday.
Slow tempo + no conviction = sit on your hands.
Key Levels I’m Watching Today
Upside:
21,530 — Last week’s high; multiple failed breakouts. A clean break + hold = bullish continuation.
21,450 — Tuesday’s VAL; acted as resistance, support, then resistance again.
21,345 — Top of Monday’s single-print tail; key S/R battle zone yesterday.
21,300 — Yesterday’s low and strong intraday pivot; buyers stepped in with conviction here.
Downside:
21,150 — Bullish pivot from Monday’s opening drive
21,000 → 20,960 — Prior breakout zone; a structural support band
20,910 — High-volume congestion area from May 12
Final Note on Today
We’ve had several days of low participation and profit-taking, and now we’re getting the pullback that higher timeframes needed.
This is a reset — not a reversal… yet.
But in the short term, we’re out of balance and vulnerable to a downside continuation.
If the tape confirms weakness off the open, I’ll look for short setups.
If not, I’ll stay patient and let the next phase of structure develop.
No forcing trades. Let the market invite you in.
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