The market has been expecting a decline in jobs all year and it is likely to finally surface this week.

PRE-OPEN MARKET COMMENTS WEDNESDAY – The Big Beautiful Bill is likely to pass in the next week and Republicans are trying to push it through before the 4th of July. It contains massive tax cuts and it will stimulate economic growth. This is widely expected to pass and we will find out to what degree the market has already price in the news.

Powell said yesterday that if not for the tariffs the Fed would have cut rates. They are concerned that inflation will surface as prices rise and that is why they did not ease. They see softening employment conditions and stagflation (higher unemployment and higher prices).

The Fed got inflation wrong two years ago and I believe they are overly cautious. A hawkish Fed is going to create nervous jitters as employment deteriorates. Initial jobless claims have been rising and we have recently seen downward revisions to the jobs report. ADP was soft last month and today we learned that the private sector lost 33K jobs during June. That was much worse than the 100K job gains that were expected. Today Challenger Gray and Christmas reported that job cuts by employers this year are at a pace not seen since 2020.

The next FOMC meeting is July 30th and if the Fed does not cut rates (or very strongly indicate that a rate cut is coming in September) I believe the market will decline. Global economic growth is slowing and that weakness is spreading to the US. Earnings season starts in a couple of weeks and the guidance could be very soft. FedEx guided lower for the current quarter and they are not providing guidance for the rest of the year citing uncertainty. The last time they did not provide full year guidance was 13 years ago. If other companies follow suit, future uncertainty will make investors nervous.

The original tariffs will be imposed on countries that are not engaged in trade talk negotiations next week. Trump has stated that Japan is NOT likely to sign an agreement, but talks have been progressing so they might postpone the tariffs. Canada retracted a digital tax on US tech companies to keep talks going, but the progress is very slow and contentious. It seems like India could be the next big trade deal.

I don’t like the fundamental backdrop for the next few months and I see weak economic data points ahead. With a hawkish Fed and murky corporate guidance we are likely to see profit taking later this month. The jobs report tomorrow (Thursday) could come in below 100K and that will test buyers. I can’t say this enough, “You have to trade when you are confident and lay low when you are not.” The notion that many novices have is that you should always be confident and that great traders always “know” what the market is going to do next. That’s simply not true. Great traders wait for their windows of opportunity and when their confidence is high they strike.

From a technical standpoint the market has been able to make a new all-time high. I’ve missed an opportunity to aggressively swing trade the move up the last two months and I am fine with that. I have been trading smaller size and I have been sticking to day trading with some overnights. I haven’t missed the move completely, I just have not fully capitalized on it because I felt that at anytime the bottom could drop out.

Yesterday the “dogs were barking”. Laggards that have been declining suddenly caught a bid and we saw a rotation out of the high fliers and into these stocks. That is often a sign of a short-term market top.

Tread cautiously if you have bullish swing trades. The market dropped about 10 S&P 500 points after the ADP report. I am most interested in the market reaction to the Big Beautiful Bill getting passed. If the move higher is meager or if it is met by selling pressure, I’ll know that it is priced in.

Support is the low for the week ($615) and resistance is the all-time high.