Market Recap – February 3, 2025
Today’s session was marked by notable technical movements and key macroeconomic developments, shaping the market’s price action.
Key Market Movements:
- Early Session:
- @NQ Cycle Day 1 (CD1) projected average decline was tagged and reversed early in the session.
- The ES and NQ displayed divergence, with ES pushing higher while NQ lagged initially.
- Mid-Morning Activity:
- Crude oil (@CL) achieved its OPR short target.
- The market saw multiple reactions near the @ES 310ATR level.
- A4 scaling was initiated, followed by price activity around the key 5960 level, which became a decision point.
- Late Morning Developments:
- A slow drift lower signaled a potential retest of the ONL (Overnight Low).
- Warnings were issued about potential “snappy” moves, emphasizing the importance of hard stops.
- Key geopolitical headlines surfaced, including Mexico deploying 10,000 National Guard troops to curb drug trafficking and a temporary delay in tariff implementations. Market reaction is positive.
- Afternoon Trade Dynamics:
- Market sentiment flipped to a long bias after reclaiming the @NQ CD1 low, confirming a positive three-day cycle statistic.
- Consolidation took hold, leading into the lunch session, where traders were advised to remain on the sidelines unless willing to navigate the potential chop.
- Additional news-driven volatility emerged with Trump’s statement that tariffs with Mexico were not yet agreed upon, prompting another round of short-term fluctuations.
- Closing Action:
- The anticipated afternoon push saw bulls maintaining control, with ES still needing to reclaim the CD1 low. Ultimately failed 3-Day Auction.
- A notable MOC (Market on Close) sell imbalance of $2.7 billion signaled late-day weakness, preventing ES from filling its gap.
- The session ended with late-day selling pressure and an unfilled Friday gap, confirming a lack of full recovery.
Educational Takeaway:
- Technical Levels Matter: The market responded precisely to projected average declines, key levels, and reclaim points, reinforcing the importance of structured technical analysis.
- Be Aware of Macro Events: Geopolitical headlines, such as Mexico’s National Guard deployment and tariff delays, introduced volatility, underscoring the need for traders to stay informed.
- Risk Management is Essential: The warning about “snappy” moves and the emphasis on hard stops highlight the necessity of disciplined risk control, particularly in fast-moving markets.
- Time-of-Day Considerations: The lunch period consolidation proved to be a low-opportunity environment, supporting the principle of strategic patience during midday lulls.
- End-of-Day Imbalances: The MOC sell imbalance and late-day weakness demonstrated the impact of institutional flows, which can heavily