2026-08-18

MES1!

Pre-Market Playbook — Tuesday, August 18, 2026

Market Context

Risk is clearly heavier this morning. The dominant macro combination is higher global bond yields, firmer oil, continued U.S.–Iran uncertainty, and an elevated VIX, while both MNQ and MES have broken materially below Monday's trading areas.

The geopolitical headline remains the major unscheduled catalyst: Iran's top negotiator says the Strait of Hormuz will remain closed until the U.S. meets the conditions of an interim deal. At the same time, global government bond yields are reportedly reaching multi-decade highs as markets price the consequences of the U.S.–Iran stalemate.

That gives us a fundamentally different backdrop from yesterday: VIX has expanded while equity indices have repriced lower.

CNBC — S&P 500 futures drop under pressure from rising yields and oil

CNBC — Global bond yields hit multi-decade highs amid U.S.–Iran stalemate

Economic Calendar

There are no red-folder releases today, but several secondary releases could produce short-term volatility.

8:15 AM — ADP Weekly Employment Change

• ▸Previous: 8.3K

8:30 AM

• ▸Building Permits: 1.37M forecast / 1.37M previous
• ▸Housing Starts: 1.34M forecast / 1.43M previous
• ▸Import Prices m/m: 0.1% forecast / 0.3% previous

9:15 AM

• ▸Capacity Utilization: 76.3% forecast / 76.1% previous
• ▸Industrial Production m/m: 0.3% forecast / 0.1% previous

10:00 AM — Pending Home Sales m/m

• ▸Forecast: 0.1%
• ▸Previous: -5.4%

Nothing here carries the weight of tomorrow's 2:00 PM FOMC Meeting Minutes. Headline risk and the bond/oil reaction remain more important today.

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Earnings

The main report this morning is Home Depot, with Klarna among the other notable names.

The earnings calendar isn't likely to be the primary index catalyst today, but Home Depot gives us another read on the U.S. consumer and housing-related spending.

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VIX — Volatility Roadmap

Current Price: ~15.66–15.71 Daily Open: 15.81 Current Daily Low: ~15.66

VIX gapped substantially higher and created a New Day Opening Gap:

15.81 — NDOG High / Daily Open 15.50 — NDOG Midpoint 15.19 — NDOG Low

Price has already rejected from the upper area and is trading beneath the daily opening price.

That means the immediate move is a 0→1 downside delivery.

VIX Downside Scenario

The first draw is straightforward:

15.50 — NDOG Midpoint

That's where I want to watch for the potential 1→2 retracement.

If the retracement stays beneath 15.81, another downside leg could target:

15.19 — NDOG Low → 14.98 — Weekly Open

Below there, we're back into Monday's structure:

14.90 → 14.80 → 14.61

For equities, sustained VIX movement through 15.50 → 15.19 would support a meaningful index relief rally.

VIX Upside Scenario

For volatility to regain control, the first requirement is:

15.81 — Daily Open / NDOG High

Acceptance above there brings:

15.96 — 1H FVG / HTF Order Block Low → 16.03 — Monthly Open → 16.09 — Weekly High

The larger objective is:

16.46 — HTF Order Block Midpoint

That's an especially interesting area for a possible reaction.

VIX Decision

Below 15.50: increasing evidence of volatility compression.

15.50–15.81: decision zone.

Above 15.81: volatility remains constructive.

Above 16.03–16.09: strong warning against aggressively fading equity weakness.

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MNQ — Nasdaq Playbook

Current Price: ~29,745 Daily High: 30,124.25 Daily Open: 30,078.75 Pre-Market High: 29,785.50 Weekly Low: ~29,687

MNQ is the clearest representation of today's risk-off environment.

We've sold through multiple previous lows and completely traded through the prior 4H bullish FVG. That former support area now becomes important potential resistance.

The immediate structure remains heavy.

MNQ Bearish Scenario

We're already in the 0→1 downside move, so I'm not interested in blindly chasing the market after this much displacement.

First downside objective:

29,687 — Current Weekly Low

Then:

29,625 — Previous Day Low

And the larger objective:

29,533.50 — Previous Week Low

My downside sequence is therefore:

29,687 → 29,625 → 29,533.50

A complete 0→3 delivery into approximately 29,533.50 would be a logical place to become much more cautious about initiating fresh shorts.

MNQ Bullish / Retracement Scenario

First, price has to prove it can reclaim:

29,785.50 — Pre-Market High

Then:

29,841 — Order Block

Above that we're approaching the former 4H FVG:

29,905.75 — 4H FVG Low → 29,927.75 — Swing High → 30,005 — 4H FVG Midpoint

Then:

30,078.75 — Daily Open

And eventually:

30,168.50 — Weekly Open

So the recovery ladder is:

29,785.50 → 29,841 → 29,905.75 → 29,927.75 → 30,005 → 30,078.75 → 30,168.50

Until MNQ starts reclaiming those levels, the burden of proof remains on buyers.

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MES — S&P Playbook

Current Price: ~7,734.50–7,737 Weekly Low: 7,716.25 Pre-Market High: 7,738.75 Swing High: 7,742.25 Daily Open: 7,766.50 Daily High: 7,770.75

MES has also experienced substantial downside displacement.

We're currently trading around an order-block area beginning near:

7,735

That makes the immediate 7,735–7,742.25 region today's first decision point.

MES Bearish Scenario

If this area rejects and downside delivery resumes:

7,716.25 — Weekly Low

That's the first significant objective.

Below it:

~7,700 — Imbalance

And then:

~7,683 — Order Block

So my primary downside sequence is:

7,735 rejection → 7,716.25 → 7,700 → ~7,683

Given how far MES has already fallen, I don't want to chase shorts directly into those objectives without another setup.

MES Bullish / Retracement Scenario

First, price needs to clear:

7,738.75 — Pre-Market High

Then:

7,742.25 — Swing High

Acceptance above that opens a much more meaningful retracement.

The primary 0→1 objective would be:

7,766.50 — Daily Open

Immediately above:

7,770.75 — Daily High

So the bullish sequence is:

7,738.75 → 7,742.25 → 7,766.50 → 7,770.75

I'm not currently expecting a complete recovery of the week's decline. If buyers can simply reclaim the daily opening area, that's already a substantial intraday retracement.

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Intermarket Scenarios

Scenario 1 — Risk-Off Continuation

This is the clean bearish alignment:

VIX: reclaims 15.81 → 15.96 → 16.03/16.09.

MNQ: loses 29,687 → 29,625 → 29,533.50.

MES: loses 7,716.25 → 7,700 → ~7,683.

This would confirm that the overnight repricing isn't merely a liquidity event but is continuing into the cash session.

Scenario 2 — Relief Rally

The best bullish setup probably isn't about predicting a bottom in MNQ or MES.

It's about watching VIX first.

If VIX continues its current 0→1 decline:

15.66 → 15.50 → 15.19

while:

MNQ reclaims 29,785.50 → 29,841 → 29,905.75

and:

MES reclaims 7,738.75 → 7,742.25

then I have much better evidence for an equity retracement.

That could eventually target:

MNQ: 30,005 → 30,078.75

MES: 7,766.50 → 7,770.75

Scenario 3 — Chop / Divergence

There's also a third possibility that matters today.

VIX could remain elevated inside 15.50–15.81 while MNQ and MES consolidate after the overnight selloff.

That's not necessarily bullish or bearish—it can simply mean the market is waiting for another catalyst.

With Iran/Hormuz headlines capable of crossing unexpectedly, that's a situation where I don't need to manufacture directional conviction.

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High Post

Today's environment is different from Monday.

Yesterday, the question was whether markets could continue higher from elevated prices.

Today, we've already received significant downside displacement.

VIX has gapped higher. MNQ has traded completely through its prior 4H bullish FVG. MES has broken multiple lows. Bond yields and oil are adding pressure, while the Strait of Hormuz situation provides continuing headline risk.

So the mistake today would be seeing all of that bearish information and deciding that I automatically need to short at the lows.

I don't.

My job is to identify where the next asymmetric setup develops.

For VIX, 15.50 and 15.81 frame the immediate battle.

For MNQ, 29,785.50 is my first upside reclaim, while 29,687 is the immediate downside draw.

For MES, 7,738.75–7,742.25 defines the first recovery test, while 7,716.25 remains the downside liquidity.

If those lows break while VIX expands, I have continuation.

If VIX compresses while MNQ and MES reclaim their pre-market structures, I have the foundation for a relief rally.

Until one of those conditions develops, there's nothing wrong with sitting on my hands.

Today's reminder:

The overnight move already happened. I don't get paid for predicting what already happened. I get paid for waiting for the next setup.