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Big Rally, Bad Timing: Don’t Trust the Tape Just Yet [Redux]
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I’m happy the markets rallied, but there is a big disconnect between what’s real and what’s not. The disconnect between Iran saying there are no talks with the U.S. on the Strait of Hormuz and the rare joint U.S./Japan intervention that helped push the yen off a 40-year low is, at the very least, unsettling and comes at a very bad time for the U.S. Treasury markets. If Japan decided to support its currency by selling some of its vast holdings of U.S. Treasuries, that could add to the pressure on U.S. bond yields and interest rates at an already uncertain time for the rising cost of the U.S. debt and Fed policies.
The PitBull asked me a little while ago, “Do you know why the markets rallied so much today?” and I said, “The BS Trump/Iran story and propped-up yen.”
After falling overnight, the DXY (Dollar Index) is trading at 99.99, up +0.08, or +0.08%, at 6:04 p.m.
Tom Incorvia - Blue Tree Strategies
The decisive breakout from the multi-week balance area on June 24 indicates that the market found new information to drive prices higher. However, the recent pullback suggests responsive sellers are testing the conviction of the breakout. This is a classic two-way auction process after a strong directional move.
Looking at the 30-minute chart, we see that today's value area is building higher than Friday's range. In auction theory, this suggests that buyers are willing to accept value at these higher prices, absorbing last week's responsive selling. If value continues to build higher, it would confirm the daily breakout. However, if value migrates back into Friday's range, it would suggest that the market is rejecting the breakout.
The key now is to see where value settles into the close. If buyers continue to defend these higher prices, it strengthens the case for upside continuation. However, if responsive selling persists and value moves back into the prior range, it would put the daily breakout in question. The market is in a delicate balance as it determines the validity of these new higher prices.
You can purchase Tom’s Course on Volume Profile here
The ES traded in a 7543.50 to 7567.75 Globex trading range, with 235k contracts traded, and opened Monday’s 9:30 ET regular session at 7546.25, up 26.25 points, or +0.35%.
After the open, the ES rallied a few points and then sold off down to 7542.75. It traded 7564.25, rallied 24 points up to 7588.25 at 9:45, and then made 14 higher highs up to 7635.00 at 2:11.
It pulled back to 7637.75 at 3:04, pulled back to 7630.00, and traded 7633.00 as the 3:50 cash imbalance showed $2.5 billion to buy. It flipped to $1.3 billion to sell, traded 7626.25, and traded 7628.00 on the 4:00 cash close.
After 4:00, the ES traded down to 7625.25 and settled at 7631.25, up 112 points, or 1.49%. The NQ settled at 28,929.25, up 525 points, or 1.85%; the YM settled at 53,392, up 757 points, or 1.44%; and the RTY settled at 2991.60, up 53.60 points, or 1.82% on the day.
Iran denies Trump’s assertion that talks for a deal are restarting. Iranian Foreign Ministry spokesperson Esmaeil Baghaei on Monday said Iran is not currently holding talks with the United States, telling reporters Tehran is instead in discussions with Oman about a temporary safe route through the Strait of Hormuz.
“We currently do not have negotiations with America,” Baghaei said, according to NBC News, adding that Iran has no plans to host foreign delegations or send negotiators abroad in the coming days.
In the end, it was a total buy fest that not only trapped the shorts, but unless you paid up, you could not get in. In terms of the ES and NQ’s overall tone, it was a perfect storm: oil down and bonds up. In terms of the ES’s overall trade, volume was up 0.1% yesterday afternoon.
Market-on-Close Recap
The MOC opened with a strong $2.6B buy imbalance, supported by $4.8B in buy orders against $2.2B in sells. The dollar lean was +68.7%, crossing the 66% threshold and signaling a broad institutional buy program, while the +56.2% symbol lean was more rotational. There were 387 stocks paired to buy and 302 to sell.
The strongest wholesale demand was concentrated in the Nasdaq, where the dollar lean reached +83.6%, and the symbol lean hit +83.3%, with 85 buys against only 17 sells. The S&P 500 was also firmly buy-driven at +70.6% by dollars, though its +63.7% symbol lean showed slightly less uniform participation. The NYSE remained rotational at +53.8% buy dollars and +51.4% buy symbols.
The imbalance strengthened to $2.8B at 15:53, then reversed sharply. It flipped to a $571.0M sell at 15:54 and expanded to a $1.0B sell at 15:55. From 15:56 through the close, the flow became increasingly rotational, moving between small buys and sells before finishing at only a $62.0M buy at 16:00. That late collapse showed the opening demand was not sustained into the final print.
Information Technology dominated sector demand with a $1.5B net buy and an +80.5% dollar lean. Consumer Staples showed wholesale buying at +85.1% dollars and +66.7% symbols. Materials posted a +74.9% dollar lean, while Consumer Discretionary reached +75.5%. Energy was the weakest sector at a $14.5M sell, with a -62.1% symbol lean. Financials also finished with a $160.0M sell despite a +54.0% symbol lean, highlighting concentrated selling in larger names.
AAPL led individual buys at $395.2M, followed by MSFT, MU, AMD, and AVGO. Major sells included SNDK at $179.0M, NVDA at $148.1M, MA at $120.0M, META at $118.7M, and BMY at $92.6M. The MOC began as a tech-led buy program but transitioned into a highly rotational close.
Daily Market Recap 📊
For Monday, August 3, 2026
NYSE Breadth: 71% Upside Volume
Nasdaq Breadth: 84% Upside Volume
Total Breadth: 80% Upside Volume
NYSE Advance/Decline: 69% Advance
Nasdaq Advance/Decline: 74% Advance
Total Advance/Decline: 72% Advance
NYSE New Highs/New Lows: 100 / 39
Nasdaq New Highs/New Lows: 191 / 172
NYSE TRIN: 0.91
Nasdaq TRIN: 0.54
Weekly Breadth Data 📈
For Week Ending Friday, July 31, 2026
NYSE Breadth: 53% Upside Volume
Nasdaq Breadth: 56% Upside Volume
Total Breadth: 55% Upside Volume
NYSE Advance/Decline: 54% Advance
Nasdaq Advance/Decline: 52% Advance
Total Advance/Decline: 53% Advance
NYSE New Highs/New Lows: 286 / 189
Nasdaq New Highs/New Lows: 468 / 692
NYSE TRIN: 1.05
Nasdaq TRIN: 0.83
ES & NQ Levels (Premium only)
BTS Levels are an OP Premium Feature.
Polaris Trading Group Summary - Monday, August 3, 2026
Monday developed into a powerful bullish trend session and was ultimately classified as a Cycle Day 3 Super Cycle. David’s premarket framework remained accurate throughout the day, with buyers holding control, major upside objectives being fulfilled, and the market reaching the projected Cycle Day 3 range target almost exactly.
Premarket Framework
Sunday Globex opened with a rare gap higher.
The gap held overnight and fulfilled the 7556 Cycle Day 3 penetration level.
The penetration level aligned with the D-Level.
David identified 7540 as the line in the sand.
Acceptance above 7540 supported continued upside.
The early message was clear: the bulls had control unless they lost that level.
Morning Session
The market quickly confirmed the bullish thesis.
Initial upside targets at 7555 and 7570 were fulfilled.
The 7580 Daily Trade Strategy target was also reached.
The room noted the importance of the 89 EMA and, specifically, the slope of the moving average.
Price continued rotating higher with very little sustained selling pressure.
The market reached the call wall and completed the identified TTT levels.
Shorting the strength remained a low-probability approach.
Midday Extension
The market continued to trend steadily higher.
David classified the move as a Super Cycle.
Price had rallied approximately 270 points from the Cycle Day 1 low by late morning.
ES exceeded the expected one-standard-deviation move near 7600.
Price reached the 161.8% Fibonacci extension from Friday’s range.
The 7613 Targetmaster objective came into play.
NQ reached its D-Level near 28813.
David described the session as a train that “kept rolling.”
Bears remained largely inactive as momentum continued.
Afternoon Target Fulfillment
The projected Cycle Day 3 range target measured 7634.96.
Price reached 7635.25, fulfilling the target almost exactly.
David confirmed that the maximum Cycle Day 3 objective had been completed.
The three-day cycle produced approximately 307.50 points.
This confirmed the move as a true Super Cycle.
Once the projected target was reached, the day was considered largely fulfilled.
Late-Day Price Action
Sellers became more aggressive after the major target was achieved.
Bid liquidity near 7627 was swept.
The 7625–7627 zone became the key support area.
Multiple liquidity sweeps occurred around 7627 and 7633.
Late-session order flow became less stable.
The Market-on-Close imbalance initially showed a large buy imbalance.
It later flipped to a sizeable sell imbalance.
David described the final minutes as end-of-day shenanigans.
Positive Trade Opportunities
Maintaining a long bias above 7540 provided the clearest opportunity.
Traders had several planned objectives to work with:
7555
7570
7580
7600
7613
7634.96
The best opportunities came from buying controlled pullbacks rather than fading strength.
Traders who followed the trend had multiple chances to scale profits at predetermined levels.
Patience was rewarded as price continued moving from one objective to the next.
The prepared Daily Trade Strategy and Cycle Day framework provided a clear roadmap.
Lessons Learned
Respect the line in the sand
The 7540 level gave traders a clear directional decision point.
Acceptance above it kept the bullish structure intact.
Do not fight a powerful trend
Price appeared extended several times but continued higher.
Extension alone was not a valid reason to short.
Follow the Cycle Day structure
The Cycle Day 3 projection provided a reliable upside framework.
The 7634.96 target was fulfilled with impressive precision.
Watch the slope of the moving average
The 89 EMA was important, but its direction and slope added meaningful context.
A rising average supported continuation.
Use liquidity sweeps in context
Sweeps around 7627 and 7633 did not automatically signal a reversal.
They needed to be evaluated within the broader bullish trend.
Stay disciplined with execution
David noted that a final position was accidentally closed.
Even on a strong day, careful order and position management remain essential.
Recognize when the day is fulfilled
Once the maximum projected target was reached, the risk of chasing increased.
The appearance of stronger sellers suggested a shift toward protecting gains.
Final Takeaway
Monday was a textbook bullish Cycle Day 3 trend session.
The market remained above the key 7540 level.
Nearly every major upside objective was fulfilled.
The strongest results came from trusting the prepared levels.
Traders were rewarded for staying aligned with the trend.
The central lesson was simple: preparation created the opportunity, while discipline allowed traders to benefit from it.
Discovery Trading Group Room Preview – Tuesday, August 4, 2026
Market Tone
US equity futures are steady with a cautiously constructive bias.
President Trump’s decision to delay potential strikes on Iran has reduced the oil war premium.
Softer crude is supporting rate-sensitive sectors and improving overall risk appetite.
Market breadth remains uneven, but the macro backdrop is less hostile than last week.
Currency Markets
Signs of coordinated US-Japan support for the yen are helping stabilize global currency markets.
Lower FX volatility may calm carry trades and support multinational earnings.
Dollar weakness would generally benefit global companies.
Renewed dollar strength could tighten liquidity and pressure equities.
Trade and Geopolitical Risk
Several states are challenging the administration’s latest tariffs.
Ongoing legal uncertainty could increase supply-chain costs and retaliation risks.
Global cyclicals may face pressure, while domestic and defensive sectors could attract interest.
Developments in Russia, Ukraine and the Middle East remain potential volatility catalysts.
Crude oil remains a key market to watch for signs of renewed geopolitical stress.
Earnings Focus
Palantir is surging after a strong quarter, supporting sentiment in AI-linked software.
AMD reports after the close and is expected to be a major catalyst for semiconductors and NQ.
Semiconductor performance remains a key swing factor for broader technology sentiment.
Notable premarket earnings:
Caterpillar
McDonald’s
Pfizer
Spotify
BP
Merck
Toyota
HSBC
Notable earnings after the close:
AMD
Arista Networks
Pinterest
Electronic Arts
Western Digital
Wynn Resorts
Amgen
Economic Calendar
8:30 a.m. ET: US Trade Balance
10:00 a.m. ET: JOLTS Job Openings
10:00 a.m. ET: Factory Orders
Volatility and Positioning
Volatility remains elevated.
The ES five-day average daily range increased to 129 points.
Overnight large-trader volume was too light to establish a meaningful whale bias.
Geopolitical headlines and President Trump’s social-media activity remain potential volatility events.
ES Technical Outlook
ES tested 7600 before advancing into the intermediate-term downtrend channel near 7620–7623.
Momentum stalled at that area, making it the key level for the session.
A sustained move above 7620–7623 would turn the zone into support and strengthen the bullish case.
Failure to hold could open a move back toward 7437–7442.
The 50-day moving average at 7535.25 is now secondary support.
Key ES Levels
Resistance
7620–7623
7860–7865
Support
7535.25
7437–7442
7314–7319
7255–7260
7135–7140
