Last week the news cycle was as heavy as ever and it’s still being digested.

PRE-OPEN MARKET COMMENTS MONDAY – Mega cap tech earnings, tariffs, monetary policy and major economic data were released last week. Let’s review them all and then look at the technicals.

The action was pretty dull heading into the FOMC statement and the Fed was NOT expected to cut. Officials are split with some favoring higher for longer and others favoring a rate cut. They still expect higher inflation due to the tariffs and they are seeing signs of weakening employment. The odds of a September rate cut increased to 80%, but that had more to do with the jobs report than the FOMC Statement. US 10-year Treasuries rallied above the 100-day MA Friday.

META and MSFT posted solid numbers Wednesday after the close and the market made a new all-time high when it gapped higher Thursday. The results were good, but stocks are priced for perfection. The question was whether there was still some gas in the tank. Gaps up to a new all-time high often spark profit taking and you should have been prepared for that.

That was a really nice gap reversal Thursday and that was the nicest trading set up of the entire week. The market struggled to advance and there was a double top intraday. Once it entered the overnight gap the selling pressure accelerated. The bounce mid-session was not able to get through VWAP and that was a really nice entry for shorts. The market closed on the low of the day ahead of the jobs report and earnings from AAPL and AMZN.

The reaction to APPL was fairly muted, but AMZN sold off on the news. AWS revenues did not exceed expectations by enough of a margin and there are some concerns that consumers are cautious.

The jobs report on Friday was weaker than expected and the downward revisions to previous months were material. It turns out that we only had 19,000 new jobs in May and 14,000 new jobs in June. There is no way the market would have made a new all-time high with those results, but here we are.

The entire BLS is crap and it has been for decades. The adjustments are ridiculous, the way they adjust employment based on the census and the way they remove people from the workforce after 6 months of unemployment is a joke. Regardless, the market trades off of the number so the jobs report is relevant. I trust ADP more than I do the BLS, but they are starting to adjust their numbers as well (to get closer to the BLS number).

The 3% GDP growth last quarter did surprise me. That could have been more tariff front running, but we keep waiting for the economic weakness that never comes. Some of the global PMIs were soft and they fell into contraction territory. Tuesday we will get ISM Services and that is the big number this week.

Some trade deals were forged, some were not. Tariff levels have largely been defined and in a few months the economic impact will be known. Talks with China in Stockholm progressed, but oil imports from Iran and Russia are a sticky point.

So how do we digest all of this news? In general, the tariffs are set and the Fed wants to see if they ignite inflation. They have the latitude to ease and that will keep a bid to the market. Employment has been steady this year and now we are seeing weakness. Stocks are priced for perfection, but the backdrop is uncertain. The Fed and politicians are in recess and the market gets nervous when no one is minding the shop.

From a technical perspective, the bearish engulfing candle on Thursday left a nasty scar. That was accentuated by the drop Friday. Even the weekly chart has a bearish engulfing candle. August and September are seasonally weak months and now we have signs of selling pressure. I am favoring the short side for day trades and overnights.

If you wonder if AVWAPQ is relevant, look where the SPY closed Friday. When that support is breached the market will have an easy path to the 50-day.

The bounce this morning won’t last long. I hope we tread water for a day so that I can get my bearings and find some good shorts. Global markets were generally up so there is a slight tailwind.