Red Open in a Strong Market: First Pullback or a Trap?
Gap-downs in bullish trends often invite buyers — but this one comes with risk.
Market Context – May 15, 2025
Today marks the first red open in over a week, with futures gapping down ahead of a heavy 8:30 AM data slate. Key reports include Retail Sales, PPI, Core PPI, and Jobless Claims — all of which can spark sharp volatility. Currently, the market remains within the two-day range, and the big question is whether we bounce back post-data or confirm a pullback.
In trending markets, gap-downs often act as buying opportunities — but with recent extensions and today being the first red start, caution is critical. This could either be the “buy-the-dip” moment bulls are waiting for… or the first crack in the armor.
Key Levels to Watch
ES: 5865 (support), 5912 (resistance)
Bullish Scenario
If the market holds support post-8:30 AM and begins reclaiming VWAP and opening range highs, buyers may step in aggressively. Watch for high-volume absorption and strength in NVDA/TSLA as a sign to join the bounce.
Bearish Scenario
A failure to hold gap-down support, followed by lower highs and a loss of VWAP, could lead to further downside — especially if economic data misses expectations. If ES breaks 5865 with conviction, the pullback may accelerate.
Mindset Tip of the Day
First red opens after a rally are emotional traps. Stay flexible — and let price action confirm your bias.
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Disclosure
The information provided in this article is for educational purposes only and should not be considered as financial advice. Trading and investing in financial markets involve substantial risk, and it is important to conduct your own research and consult with a qualified financial professional before making any investment decisions. The author is not responsible for any financial losses or gains that may result from actions
Trading futures, stocks, and options involves significant risk and is not suitable for all investors. This content is for educational purposes only and does not constitute financial advice.