Yearly Open in Play — Is This the Real Bull or Just a Bounce?CME_MINI:ES1!
Macro Recap
Late Friday, Moody’s lowered the US’s sovereign rating from AAA to Aa1. This reflects a unanimous downgrade of the US, joining S&P and Fitch in stripping the US of its AAA status.
Would this result in a sell-off?
In our analysis, and consensus from the Street, is that it will be contained since the downgrade puts Moody’s in the same camp as S&P and Fitch.
There are talks of renegotiating UK–EU trade deals, which has boosted cable.
On the geopolitical side, not much has changed. Ceasefire talks are ongoing but stuck in neutral. No new catalysts—yet.
The spotlight, however, is firmly on the Fed. Over the weekend, President Trump called on Chair Powell to cut rates “before it’s too late,” echoing a post from April 17th where he labeled Powell’s speech “a complete mess” and added, “Powell’s termination cannot come fast enough.”
With a packed schedule of Fed speakers this week, the real question is whether they’ll double down on the Fed’s independence—or bend toward political gravity, especially with Trump reportedly eyeing the top job.
Economic data is light. That puts full attention on the Fed and headline risk. Traders should stay nimble and alert. Momentum could shift fast.
Markets are now pricing in two cuts of 25 bps each for September and December 2025.
This is very different from market pricing one month ago, when reciprocal tariffs were announced.
Monitoring rate cut expectations is another key theme this week, with multiple Fed speakers scheduled.
ES Futures
ES Futures have been one-time framing up — i.e., creating higher lows — on the weekly timeframe.
ES Futures have also created higher highs.
Key Levels:
• March 2025 High: 6052.50
• 2025 Yearly Open: 6001.25
• Previous Week High: 5977.50
• Previous Week Mid: 5856
Bull Market—or Just a Bear Bounce?
That’s the question traders are asking.
From our perspective, this looks like a recovery from a trade policy shock. The market took the hit, recalibrated, and bounced back.
But let’s not get ahead of ourselves. After a move this strong, some pause is natural. We’re watching for potential consolidation or profit-taking, especially with price action still holding below the yearly open.
Caution is warranted here—momentum’s in play, but the structure hasn’t fully confirmed the shift.
Scenario 1: Another Up Week, Capped by Yearly Open
In this scenario, the rally will be contained as the yearly open remains a strong pivot and resistance zone.
The LIS (Line in the Sand) for short trade opportunities is the yearly open pivot.
Scenario 2: Range-Bound Week
In this scenario, we expect markets to consolidate, remaining above last week’s low and finding support at the prior week’s mid-range.
We will look to initiate longs from the previous week’s mid-range, looking for level-to-level scalping opportunities in a range-bound market.
