The news is fairly light this week and I don’t see any speedbumps ahead. Profit taking is the only thing that can keep a lid on the action.

PRE-OPEN MARKET COMMENTS MONDAY – The market has been able to deflect bad news and buyers are still gobbling up dips. The Fed has room to ease and they are counting on that safety net.

The jobs report and the revisions were shocking and the market recovered from that drop last week. ISM services almost dropped into contraction territory, but bulls were not discouraged. Global economic conditions have been deteriorating this year and that weakness was eventually going to find its way to the US. Last Friday, Canada reported a 41K decline in employment for July and their jobless rate is almost at 7%.

The tariffs have pushed demand forward and the inventory build-up has to be worked off. That means we are likely to see a decline in new orders. The good news is that the tariff front running will keep inflation fairly low for a few months.

This week the CPI and PPI will be released. Those are the big economic releases this week. Inflation has been easing and these numbers should not have a major impact.

Trump and Putin are scheduled to meet Friday in Alaska to discuss a possible peace agreement. I’m sure the rhetoric will be encouraging, but these negotiations are going to take a long time. Additional sanctions on Russia could greatly increase tariffs on China and India if they continue to buy oil from Russia.

This week I’ll be watching for signs of profit taking near the all-time high. It’s the only thing that can keep a lid on this market rally. One day drops are meaningless, we need to see sustained selling that lasts a few days. We haven’t seen that in months. When we have a bearish trend day we need to follow that up with another day of selling. Buyers need to be discouraged from buying dips and right now they are gobbling those up. Late day declines on heavy volume would also be a sign of resistance and I will be watching for that.

The market is within striking distance of the all-time high. If we easily move through it this week the breakout would fuel short covering. I’m not ruling this out.

Until we see selling pressure, assume that the trend is intact and that dips are buying opportunities. There are more good longs than there are good shorts, but earnings season has provided some opportunities on both sides.

Overseas markets were up slightly and the S&P 500 is going to start the week off on a flat note. There is some horizontal resistance at the high from Friday. A move right through it early in the day would be bullish. If the market can’t get through that resistance in the first hour, I believe the bid will be tested. That will tell us just how motivated buyers are at this level. A brief and shallow drop that preserves most of Friday’s gains would be a sign that the bid is still strong. A prolonged drift down to the low from Friday would suggest that resistance is building.

This is likely to be a dull trading session. Only trade stocks that have heavy volume and steady directional price movement through D1 price levels. Zero in on a few good candidates early in the day and then watch for entry points that sync up with the market. We are in hit and run territory. Stay flexible.