Market Outlook || ES NQ || 5.31.26
Indices at ATH, VX crushed, yields and crude fading
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I use Fibonacci sequences as the core of my analysis, combining mechanical levels with contextual zones drawn from auction theory.
Mechanical levels help me map out potential support, resistance, and distribution zones so you can see where I expect buyers or sellers to step in
I color‑code these levels so they’re easier to follow on your charts:
blue = potential discount zones (support),
purple = “line in the sand” levels I expect price to defend
red = premium zones (resistance / distribution)
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News for the week
Busy week in terms of news prints. We should see some nice range this week.
JPY
As you guys all know I started paying attention to JPY / N225 — This seems to have more effect on markets than I have previously thought. Alot of those big overnight moves during Asia typically line up w some JPY prints.
I am still experimenting with different structure for my outlooks — i’m not sure if I want to put everything into one article / indices commodities etc/ or split it up into few separate articles
10Y VX
Nice reversion in 10Y.
Same for VX —
This was something that I did mention in my last newsletter.
of course, given what they represent and how they move, it doesnt necessarily mean that reversion in VX/10y = go turbo long
However typically, when you see VX dropping like this it doesnt support a strong short thesis.
The market moves in cycles, so once VX does rip up into 28-30s I am cautious / monitoring for a reversion. This gives us context as to what is happening amongst participants.
When you see VX dropping fast, there is a potential for pullbacks to be more shallow and dips to be bought. If you are going to go short that adds context into creating a trade plan, and being realistic with targets and letting go when your levels are invalidated.
ES
Reviewing the last few profiles, youc an see we did have that consolidation followed by a rotation higher.
We are at ATH so that means we are still in price discovery. There are a lot of things going on at the same time to take into consideration
New Fed Chair Warsh, War in Iran ending, inflation from elevated crude prices cooling etc.
Market profiles / Auction theory is there to provide context, and I think a lot of people miss the nuance of them.
This is a parallel i’ve seen in when taking organic chemistry — people get caught up in memorizing the shapes etc, but not thinking about it in a more fluid context.
So looking at our most recent profile, we do have a balanced shape forming at the high after a trend day.
We open technically in balance, near VAH of prior day.
We see an opening drive rejection, and some consolidation in the IB, followed by a tinsy liquidity break down into VAL of that upper distribution of the prior day.
We actually closed near IB low of the profile. Which gives some context such as — are buyers getting exhausted? And in order to see a continuation to the upside, do wee need to retest downside support below us to find more buyers.
There are two types of buying — initiative and responsive, which provides important context.
Here we can view this in a binary sense — price can breakout to the upside and continue trending higher, just as it can rotate lower if to find more buyers.
What I’m watching for:
Since there was a bit of a weak high put in, only one handle it looks like, I would just be a lil cautious of that.
Depending on whether or not we go up or down first, we could be met with distribution as we peak above that high with out a pullback into downside support first.
Downside support
7560 || 7536 || 7502
Potential overhead supply
7628 || 7648
NQ
Heres my profiles for NQ
one note — the profile does differe from ES, ES has more balanced consolidation, where as NQ has these double prints near highs, followed by a bit of more bottom heavy consolidation.
Finally got around to building out a template for NQ, i’m not sure if I will run a bigger compression or not, but for now it works.
Thanks for reading SaltStack.
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