The Big Beautiful Bill was passed and we will learn to what degree it was priced into the market.

PRE-OPEN MARKET COMMENTS MONDAY – I hope all of you enjoyed the extended weekend. Today’s session will be a “holiday hangover”. Everyone will be trying to get their bearings and there wasn’t any major news over the weekend.

Last Thursday the market surged higher on a better than feared jobs report. It wasn’t stellar, but the reaction was. Stocks jumped up on the news and with the BBB pending, shorts were not going to stick their heads in a noose ahead of a long weekend. Once the upward momentum was established it continued the rest of the session.

In the jobs report we could see that half of the gains were in the public sector (state and local governments) and not in the private sector (corporations). Many of those government jobs are seasonal and I don’t see this as a particularly strong sign. If you strip out those gains, private sector jobs only increased by 74K. This is consistent with the low reading from the ADP report (-33K) last week.

Technically, the market is in a nice up trend. Bears have been waiting for the bad news that never comes. Some Asset Managers are under-allocated and every time an economic report comes out better than feared the market rallies and they are forced to play catch up. ISM Manufacturing and ISM Services were slightly better than expected last week with ISM Services barely above the expansion level.

The economic releases this week are very light.

Earnings season will start next week. Before the start of Q2, expectations for the S&P 500 earnings growth was 9.5% for this quarter. Since then, analysts have cut those expectations in half. Downgrades of this magnitude are VERY unusual. Be very careful rejoicing that companies have “beat” earnings estimates. The bar is very low. This is where a lot of traders get confused. The company beats expectations and then sells off. I believe that forward guidance will be very murky and many companies might not provide it. This creates market uncertainty.

Gradually deteriorating economic activity and a hawkish Fed have not been enough to deter buyers. The market is a discounting mechanism and soft earnings could spark selling pressure. Valuations are high and stocks are priced for perfection.

We don’t guess that earnings are going to be weak, we have to wait for the numbers. Perhaps they will be better than feared and the market will lift off.

In the next 3 weeks we will get more clarity. What impact have tariffs had on profit margins and what future impact might they have? Will the Fed remain hawkish or will they signal a rate cut in September? These are key pieces to the puzzle. From my view point the market will finally be able to settle in. News from the White House (tariffs, trade deals, Iran and the BBB) will settle down and we will be able to make sense of all of this.

I plan to keep my swing trading to a minimum until then. I like sparingly selling some OTM puts/put spreads and I like day trading.

This is going to be a dull day and in all likelihood a fairly dull week. We are going to see a little profit taking this morning. Once support has been established, look for strong stocks that are moving higher on volume. Those will be your best bets.

The range from Thursday are support and resistance.