Credit Downgrade Shocks the Market: Breakdown or Bounce?
ES dropped 100+ points overnight — but buyers are starting to fight back.
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Market Context – May 19, 2025
The week kicks off with a sharp gap down after news broke of a U.S. credit rating downgrade, rattling overnight sentiment. ES closed Friday near 5980, then plunged to 5891 in the Sunday session. As of this morning, we’ve bounced to reclaim the 5920 area, but volatility is elevated and structure remains fragile.
The key now: is this just a knee-jerk selloff — or the start of a deeper reset? ES is building higher lows after bottoming overnight, suggesting potential for a bounce… but we’re still under key moving averages and prior day value zones. 5900 is the battleground — and it may define the week ahead.
Key Levels to Watch
ES: 5891 (support), 5926 (resistance)
SPY: 588.00 (support), 592.30 (resistance)
Bullish Scenario
If ES holds 5900 and builds above 5926, a push toward Friday’s breakdown area (5945–5955) is possible. Watch for confirmation via higher lows and tech leadership rotation (NVDA, TSLA).
Bearish Scenario
Rejection near 5926 and a break below 5891 could accelerate downside. If VIX continues to rise and breadth weakens, we may revisit the 5860–5840 zone.
Mindset Tip of the Day
Big gap-down days are emotional. Let price settle and avoid chasing either side early — structure will tell you where the true opportunity lies.
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