Oracle provided incredible guidance three years out and the PPI dropped .1%.

PRE-OPEN MARKET COMMENTS WEDNESDAY – Last month PPI came in hot and there was a chance that it could remain elevated. That would have provided a headwind for the Fed, but they’ve stated that any tariff related price increases should be temporary. The PPI dropped to -.1% and that is consistent with that theory. This should pave the way for a rate cut next week and another rate cut this year.

Yesterday the BLS cut 910K jobs from their estimates from April 2024 – March 2025. That is the largest downward revision since the 2009 financial crisis. Employment has been much weaker than reported and we’ve seen big downward revisions this summer. This has the Fed’s attention and job growth is a much greater concern than inflation. Central banks around the globe were ahead of this curve and they have been easing for a year.

The ECB started cutting rates in 2024 and they have cut rates five times this year. They are not expected to cut rates tomorrow.

The FOMC Statement is a week from today. A 25 basis point rate cut is priced into the Fed Fund Futures and there is a small chance that the Fed will cut by 50 basis points. Is a bigger rate cut better? Not necessarily. There have been times when the market views that as an act of desperation and that they waited too long or that conditions are deteriorating rapidly. A 25 basis point rate cut and a lean towards another rate cut this year would be more market friendly in my opinion.

ORCL reported that they see cloud infrastructure revenue climbing from $18 billion dollars now to $144 billion in 4 years. The stock is up 30% overnight and it is very unusual to see mega cap tech stocks make moves of that magnitude. That is sparking a big overnight move higher.

Yesterday the market rallied late in the day ahead of a potential speed bump. That is fairly unusual and we saw the same type of price action last Thursday ahead of the jobs report. That is a sign of aggressive buying and a sense that no matter how bad the number is, the market is heading higher.

The CPI will be released tomorrow and the hot PPI last month could show up in consumer prices. After today’s drop in PPI, any spike in CPI will be viewed as temporary.

Overseas markets were up marginally, but the S&P 500 is well above the all-time high. There’s nothing to stand in the way of this freight train this week. Tech stocks will be very strong today. I don’t chase gaps up to a new all-time high. Given the overnight news, this move could gain traction early. Any compression or dip will be short-lived. I would spend the first 30 minutes looking for RS. Stocks that have not made huge gaps up will be your best bets. They have plenty of upside and they will grind higher. Stocks that stage big early moves will quickly exhaust any remaining upside potential. If you want to trade them, you have to wait for a nice pullback.

I’m not expecting a big gap reversal today. While we watch early in the day we can look for any long red candles. That would be a sign that there is some selling pressure and that we don’t have to rush. Last Friday the market gapped up on a dismal jobs report and it reversed. Today the news is quite good so don’t expect that same reaction. It is critically important to put news into its proper context.

Support is the previous all-time high and resistance is… ?

The market has been treading water near the all time high as it waits for a catalyst.

PRE-OPEN MARKET COMMENTS TUESDAY – The overnight news is light and international markets are mixed with small moves. The S&P 500 is going to open flat and all eyes will be focused on tomorrow’s PPI release before the open.

The economic releases don’t get any bigger than the jobs report and last Friday’s release was a big miss. That news should have produced a move and it didn’t. The PPI came in at a very hot .9% last month and traders will be watching for that to normalize. Analysts are expecting a rise of .3%.

CPI will be released Thursday and that could be elevated. It typically takes 2-3 months for producers to pass price increases on to consumers. Analysts are expecting a CPI reading of .3% and I feel there is room for disappointment.

Will hot inflation numbers keep the Fed from easing? No. I believe a 25 basis point rate cut will happen next week. There is even a remote (10%) chance for a 50 basis point cut. The Fed has admitted that tariff related inflation might be temporary so they are not overly concerned with it. They are more concerned with the drop in employment. Central banks around the world have been much more concerned about economic growth and they have been easing for most of the last year. Could hot inflation readings postpone future rate cuts? Yes.

There is a BLS benchmark labor revision out at 10 am ET this morning. This is an annual adjustment and given all of the recent revisions it will be interesting to see if they are consistent with a decline in employment.

Stock buybacks have fueled the market rally and we will enter the blackout period next week. Removing those buyers could weaken the bid. We are also entering one of the weakest seasonal periods for the market.

I’m not bearish, just cautious. All eyes are on the inflation numbers this week and the Fed next week.

Look for a relatively dull day today. Friday’s range is likely to hold.

The dismal jobs report last Friday did not spark a massive decline.

PRE-OPEN MARKET COMMENTS MONDAY – Last Friday we learned that only 22K new jobs were created in August. This is the fourth consecutive month of employment weakness. The market is focused on the likely rate cut next week and it gapped higher Friday. It didn’t take long for sellers to smack that move down, but the damage was contained and this morning the S&P 500 is going to open roughly where it closed Thursday.

The theory is that monetary easing will lower borrowing costs and that it will stimulate economic growth. Central banks around the globe have been easing for a year and it has not stimulated activity. When people don’t have jobs, they don’t spend money no matter how low interest rates are. The “sugar high” from the first Fed rate cut last a couple of months and then reality sets in. It takes a long time for interest rate cuts to have an impact and once the Fed starts down this path, it doesn’t end.

Investors will worry that the Fed waited too long. If you look at the Fed Fund Futures, there’s a 10% chance priced into a possible 50 basis point rate cut. That’s unlikely, but it shows you that the market hasn’t even gotten the first rate cut and it is looking for the next one.

Last week we learned that Canada lost 66K jobs in August and their unemployment rate rose to 7.1%. That is not good news for our second largest trading partner and global weakness is spreading to North America.

This Wednesday the PPI will be released and the CPI will be released on Thursday. Producer prices spiked .9% last month and analysts are expecting that to decline this month (.3%). It typically take 2-3 months for producer prices to flow through to consumers so we should expect an elevated CPI on Thursday.

I don’t like the fundamental back drop and this is seasonally one of the weakest periods of the year. I am going to keep my trades short term for the next two weeks and I will wait for the FOMC reaction.

Support was established last Friday and the market bounced off of that level. Buyers will test the upside now that they know the damage from the jobs report was contained. Overseas markets were up overnight and that is providing a tailwind this morning. Be patient and wait for dips. There’s no need to chase. Look for stocks that held strong during the market decline Friday. Those will be your best prospects.

This is likely to be an inside day and Friday’s range represents support and resistance.

The jobs report has been released and to this point the market has not been concerned about recent job losses.

PRE-OPEN MARKET COMMENTS FRIDAY – Yesterday the market rallied ahead of the jobs report. It left the impression that regardless of the outcome, stocks were going to move higher. If the number was light, that would increase the odds of a rate cut in 10 days. If the number was good, the Fed still might cut and conditions are not as bad as feared.

I believe that one bad number is not going to spook investors, but we are already at third month of weakness. May, June and July were disappointing when accounting for the downward revisions. I doubt we can trust the headline number and that is what drives the market. This is the most important economic release each month and the weekly initial jobless claims numbers are not consistent with a declining labor force.

JOLTs, Challenger, Gray & Christmas and ADP all reported weakness so regardless of what the BLS reports we know that labor conditions are soft.

I as writing my comments before the release and the number is out. Only 22K jobs were created in August. That is the lowest level this year and the downward trend is clear. Surely the market dropped on the news – right? No. The market is making a new all-time high.

I suspected as much when I saw the market rally yesterday ahead of a big number. That is not typical. Institutions normally wait for the release and the price action the day before is dull. Thursday’s move higher told me that no matter what institutions were going to be positioned on the long side. They weren’t going to wait for the outcome because good or bad, the market was going to react positively.

Perhaps they feel that this drop in employment is temporary and that lower interest rates will spark economic growth. Central banks around the globe have been easing for the last year and those economies have not rebounded. It doesn’t really matter what the institutions are thinking, it only matters that they are buying.

The market dips have been brief and shallow barely lasting a day. That is a sign of strength. It is typical for the market to rally after the first Fed rate cut. We haven’t seen any signs of a September market pullback and with each week that passes, that becomes less likely. By the middle of October, seasonal strength kicks in.

I don’t chase gaps up to a new all-time high and that is especially true when the news is bearish. Last month the S&P 500 lost 130 points on a 77K print. Today it is making a new all-time high on a 22K print. I am going to watch the open and if we get a run away “Gap and Go” I won’t chase it. If this scenario plays out I will find an opportunity to buy a pullback mid day. The risk of having the rug pulled out is too great. Big gap reversals are common off of gaps up to a new all-time high. If we are going to see this scenario there will be stacked long red candles right out of the gate. A more likely scenario is a compression after the gap up. That would be a sign that profit taking is being offset by buying and that eventually the market will work its way higher. The most likely scenario is a gradual pullback into the gap that finds support. This will give us time to find the best longs.

When I talk about scenarios, I am taking the initial reaction into account after the number was posted. Right now the market is convincingly making a new all-time high.

Support is $649.50 and resistance is $700.

Today we have more jobs data and they point to weakness.

PRE-OPEN MARKET COMMENTS THURSDAY – The market has been trapped in a trading range that is within striking distance of the all-time high. Tuesday the market dropped and yesterday it recovered those losses. Traders are squaring up ahead of the jobs report tomorrow.

JOLTs showed that job openings fell to the lowest level in a year yesterday. This morning Challenger, Gray & Christmas showed that there were 23K more job cuts in the last month. Today ADP reported that only 54K new jobs were added in the private sector last month (73K expected). Furthermore, initial jobless claims jumped to 237K (230K expected). All of these reports point to a weakening job market and the Unemployment Report will be posted tomorrow.

ISM Services will be posted 30 minutes after the open today. Last month it fell to 50.1 which is almost in contraction territory. Almost 80% of our economic growth comes from the service sector and as a survey, I consider this to be a timely data point. ISM Manufacturing slipped to 48.7 and that is in contraction territory.

With all of this terrible news the market must be down – right? No. The futures slipped 10 points from the overnight high, but they will still open in positive territory. A weak jobs report tomorrow will increase the odds of a rate cut by the Fed in two weeks and that is all the market is focused on. Bull markets die hard and it is going to take continued weakness over a few consecutive months before the market worries that the Fed waited too long. That timeline coincides with seasonal strength into year end.

The market has been able to weather a poor employment report in August, a weak ISM Services number and a very hot PPI (.9%) in the last month. I was a bit surprised by the resilience and it tells me that we might not get the nice drop I would like to see in September and October. If the market muddles around for another month we are likely to see volatile conditions into year end with some pullbacks and tall bounces. I would prefer to see a nice swift move lower and then a nice year end rally. Both scenarios would finish roughly at the same level, but the later is easier to trade.

With stock valuations at lofty levels and with global economic weakness spreading to the US, I have little doubt that this bullish trend is going to face very stiff headwinds. The good news from a trading perspective is that I believe we will start to see volatility that lasts a few days. That is a much better environment than what we have seen the last two months where the moves barely last a day. We need to get out of this compression and we should see movement between the 50-day MA and the all-time high into year end.

Overseas markets were up slightly with the exception of China. This is likely to be a choppy session ahead of the jobs report. If ISM Services falls into contraction territory (< 50) today, it could spark some selling. That would add to the negative releases we’ve seen this morning and we could see some nervous jitters ahead of the jobs report. Traders are not going to place big bets ahead of the BLS and who knows, a bad jobs report could rally the market (bad news is good news).

Keep it light today and let’s see if we get some directional movement. Volume is the key. We need good volume to generate sustained movement today.

The low from yesterday is support and the high from Friday is resistance. I expect to stay well within that range today.

This week we will find out if job growth is stable.

PRE-OPEN MARKET COMMENTS WEDNESDAY – Employment is the focal point this week. After the open JOLTs will be released. Tomorrow ADP, Challenger, Gray & Christmas and initial claims will be released and Friday the jobs report will be released. The Fed has been concerned about the labor market and it is their primary reason for a rate cut in two weeks.

Analysts are expecting a weak report on Friday (75K) and that should be a fairly low bar to hurdle. Initial jobless claims have been averaging around 230K and that would point to a “beat”. Even if the jobs report falls below 50K, the market could rejoice that a rate cut in two weeks is certain. The first rate cut by the Fed is typically market friendly.

Yesterday the market dropped after the long weekend. European markets were down because sovereign interest rates are rising. That translated into a drop for US markets and buyers stepped in. The market was able to enter the gap and after the close GOOG learned that it will not be forced to spin off Chrome in the DOJ’s antitrust case. That sparked a tech rally and much of yesterday’s losses have been erased.

The market has struggled to advance so we should not buy gaps up. Those moves attract profit taking. On the other hand, moves lower have been great entry points for longs. There isn’t much overall movement. The news is going to ramp up and we are out of the summer doldrums. I am expecting to see nice two-sided price movement as the month unfolds.

Until we get a nasty round of news where the selling pressure is relentless and we have a bearish trend day with heavy volume that closes on its low of the day, I won’t get overly concerned that the rally is over. Even then, I would need to see follow through selling the next day on volume. We have not seen anything that resembles this.

Support is at the close from yesterday and resistance is the close from Friday. There’s a good chance that we will fill the gap from Tuesday today.

The market is heading into a seasonally bearish period of the year.

PRE OPEN MARKET COMMENTS TUESDAY – PRE-OPEN MARKET COMMENTS TUESDAY – Global economic woes concerns are in focus and the S&P 500 is down more than 60 points overnight. France has been in the spotlight recently and its yields started to rise sharply two weeks ago. I’m just going to say that there are massive structural debt issues in the largest economies in the world and they include China, Japan and even the US.

Is this going to spark a market crash? Yes, at some point, but this problem has been festering for decades and it can continue to fester for many years. We don’t know when it is going to manifest, only that it will. Any fifth grader can do the math and reach this conclusion.

As global debt climbs, who’s going to buy it? When economic conditions deteriorate, there are fewer buyers and sovereigns are focused on shoring up their own balance sheets.

This is a very stiff long-term headwind and the market is oblivious to credit concerns and then out of nowhere it becomes a major concern. We are seeing yields rise (even in the US) when central banks are easing. That is not normal and it is a warning sign.

It cracks me up when I read that the tariffs could be blocked and that this is why the market is down overnight. Weren’t tariffs supposed to be bad? Shouldn’t this spark a market rally?

The largest market cap stock reported last week and it struggled to tread water. Stock valuations are high and we are entering a seasonal period of market weakness. Major economic releases are scheduled for this week with JOLTS tomorrow, ADP on Thursday and the Jobs Report on Friday.

Waiting is one of the most difficult “asks” of a trader. If we are not trading we feel like we are not doing our jobs. That mentality often lures us into taking risky positions. If you come to terms that there are going to be times when you shouldn’t trade you will preserve your capital and you will be ready to strike when conditions improve. When other traders are scrambling to manage losing positions you will objectively evaluate opportunities with great profit potential and you will act on them. Your inactivity will pay off when the odds of success improve.

We needed a market pullback. This is a fairly deep overnight drop and it comes after weakness last Friday. There are nervous jitters and I would respect this drop. Global markets were down considerably and this move is likely to gain traction today. I would favor a bounce to lure in bullish speculators early. That will give me time to find weakness and it will provide a good entry point. That is how I plan to spend the first hour. Stay flexible and let’s see what plays out.

Longer-term we needed this pullback to shake things up. A nice deep pullback the next six weeks would set up a great buying opportunity into year end.

The headlines are light and this is our chance to enter well.

PRE-OPEN MARKET COMMENTS FRIDAY – Yesterday the market made a new all-time high. Bull markets have a tendency to open on the low and close on the high. That results in green candles on the chart.

After a nice run the previous day, sell programs test the bid early in the day. They check to see if buyers are still interested. Once support has been confirmed, the market moves higher and this pattern continues.

From a bullish perspective I am more concerned with big gaps up than I am small gaps down. Test the bid, confirm support and spend the day filling the gap.

Initial jobless claims were better than feared, our second look at GDP was better than expected, NVDA posted excellent results and we are heading into a holiday. I would not stand in front of this freight train.

The early drop is likely to find support and I would favor the long side. Overseas markets were mixed with no net change in aggregate. That means there’s not much of a tailwind.

The economic news next week will be heavy and traders are not likely to take large positions ahead of that news and ahead of a long weekend.

If you liked a stock yesterday and it has dipped on the open today, you have an opportunity to enter well. Don’t chase big gaps up.

Support and resistance are yesterday’s range.

HAPPY LABOR DAY!

The largest market cap stock in the world is treading water after bearing estimates.

PRE-OPEN MARKET COMMENTS THURSDAY – Yesterday after the close NVDA posted better than expected results and AI is fueling the demand for chips. Good news was expected and traders were wondering if the earnings would be good enough to justify the current price.

This was a potential speedbump for the market and after an initial sell-off, the stock rebounded overnight. It is trading right where it closed Wednesday. Those who voted that the stock would be flat got it right.

This morning initial jobless claims came in at 229K. That is a slight drop from the 235K number last week and it bodes well for next week’s unemployment report. A number in the 245K range would have meant that initial claims are trending higher and that could have been problematic. We do have to take this number with a “grain of salt” and I question its reliability. Initial jobless claims should have been climbing the last three months based on the jobs report in July and they have stayed stubbornly low.

The second look at Q2 GDP was better than expected and it increased to 3.3%.

We keep waiting for a market spoiler and we haven’t seen one. The market is at an all-time high and the potential speedbumps never materialize. We are heading into a holiday weekend and given the overnight news the action should be relatively dull. Any dip during the day is likely to get gobbled up and those drops are our best opportunity to buy. We might not get any drops and if you want to jump on stocks with great RS and strong volume early in the day, start with a small position and expect to take heat. If you do that, you will be in the right mindset and you won’t panic. The stock needs to be the best of the best for you to take an early position. The market is opening flat and it is at the all-time high. Trading early should be the exception and not the rule. You will always be better off waiting for a market dip or a dip in the stock.

Support is the low from yesterday and resistance is at…? The market is bumping up against a major H+ trendline that starts Jan 2022. Normally H+ trendlines are not that strong, but when they are 3 years old I do respect them much more.

This tech giant will post results after the close today and it will impact the market.

PRE-OPEN MARKET COMMENTS WEDNESDAY – The market is searching for a driver and Nvidia earnings is the biggest news event this week. To put this into perspective, the $4T market cap is larger than the GDP of Germany. The growth prospects are healthy and good, but the stock is trading at an all-time high. Will they be good enough?

Nvidia will be able to sell to China as part of the trade deal with the US. That should be good for future guidance. AI is the hot theme and NVDA is leading the charge. Most mega cap tech stocks have had fairly muted reactions after releasing earnings. I am expecting the same from NVDA and the options markets are pricing in a 6% move one way or the other.

Tomorrow we will get the second look at GDP. A reading of 2% is expected and this “pop” from last quarter was largely attributed to a drop in imports since they are subtracted from GDP. I will be watching initial jobless claims. They increased to 235K last week. This will provide some insight into next week’s jobs report.

The market has been in a lethargic light volume float higher. The dips are brief and shallow and we have seen marginal new highs. Buyers are barely in control. Traders are waiting for the Fed to ease in September and that is keeping a bid to the market while economic conditions slip.

The little dip last week was quickly erased after Fed Chairman Powell’s speech in Jackson Hole last Friday. Half of that long green candle held and yesterday we closed near the all-time high. That confirms that the candle was legitimate.

Overseas markets were mixed.

We have Nvidia earnings after the close today and a light round of economic news tomorrow. If the reaction to both is muted (likely), the market will stagger into the holiday weekend. Keep it light and focus on buying dips.

Support is the low from yesterday and resistance is the all-time high.