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Short Squeeze Meets War Risk: The ES Is Holding Up Better Than Anyone Expected
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Confused? Well, join the crowd. Friday's jobs report showed that the U.S. lost 23,000 jobs, way lower than consensus and what the banks were looking for. Will the weak jobs report probably push Warsh to hold rates unchanged in September? That may depend on the July CPI report that comes out on August 12th.
The lower jobs report reduced the probability of a September hike from approximately 55% to 42%, but if inflation comes in hot, Warsh could still support a hike; if inflation cools, the Fed will have a strong reason to remain on hold.
But there are a lot of other reasons besides the jobs report and CPI: high yields, inflation, energy and commodity prices, an overheated labor market, wage inflation and price stability. Personally, I am not voting for higher rates, but until there is a real resolution to the U.S.-Iran war, I think the probability increases.
Stock Market Double Whammy
I want to express what I have always thought: Trump had zero exit strategy when he decided to attack Iran, who had been planning this for years and has never really wanted to strike a deal, and that seems to be more apparent than ever.
Am I surprised at how well the markets are holding up in light of this? Yes, but I also think a big part of the rally was the overly beaten-down tech and AI stocks and all the protective hedging or short selling and short squeeze combined with strong Q2 earnings.
According to FactSet, 88% of S&P 500 companies have reported second-quarter 2026 earnings as of August 7. Of those companies, 86% beat earnings-per-share estimates. FactSet
Last Monday the ES closed up 109.00 points, Tuesday the ES closed up 137.25 points, Wednesday the ES closed down 16 points, Thursday was down 14.75 points, and Friday was up 45 points.
It's very hard to deny the positive price action, and I do not doubt the ES can move higher today. As I have pointed out, over the last 6 Mondays, ES futures closed higher 4 times and lower 2 times—a 66.7% bullish rate.
But, and there are always buts, this week's Treasury auctions along with the CPI number are going to be front and center. The other part of the risk is Tehran vowing to block the U.S. Navy ships from using the Strait of Hormuz and the Iranian attack on UAE ships.
Our lean: Like I said, Mondays have been a good day for the ES, and while I think higher, I also think it will be a two-way street. I also think there is a lot of risk this week. The other part is simple: how long is Trump going to sit idle while Iran continues to cut a deal with Oman that does not include the US? Two things to keep an eye on this week: oil and yields.
The ES traded in a 7725.50 to 7778.75 Globex trading range with 184k contracts traded and opened Friday's 9:30 ET regular session at 7757.25, up 22 points or +0.28%.
After the open, the ES traded 7753.25, rallied 17.50 points up to 7770.75 at 9:45, sold off down 27.75 points down to 7743.00 at 10:00, rallied up to 7763.50, and sold off down 19.50 points down to 7744.00, just 2 ticks above the low. It then rallied up to 7786.75 at 11:15, sold off 29 points down to 7757.75 at 12:30, rallied back up to 7776.25 at 12:45, and sold off 20.25 points down to 7756.00.
The ES rallied 22.25 points up to 7778.25 at 3:15 after this headline hit the tape:
U.S. Says Iran–Oman Strait of Hormuz Deal Near, Shipping Breakthrough Expected Soon. A U.S. official says Iran and Oman are making progress.
After the pop, the ES traded down to 7772.75 at 3:40 and traded 7776.25 as the 3:50 cash imbalance showed $800 million to buy, rallied up to 7785.50 at 3:45, sold off 11.50 points down to 7774.00 at 4:30 and traded 7778.75 on the 4:00 cash close.
After 4:00, the ES traded in a narrow 6 point range and settled at 7799.75, up 44.50 points or +0.58%, the NQ settled at 29834.75, up 346 points or 1.18%, the YM settled at 54,152, up 139 points or +0.26%, and the RTY settled at 3041.60, up 32.50 points or +1.08% on the day.
In the end, there were some good dips and rips, but all 4 indices closed higher on the day. In terms of the ES’s overall tone, it was firm but not as firm as the NQ and RTY. In terms of the ES’s overall trade volume, it was low: 184k ES traded in Globex and 965k traded on the day session for a total of 1.149 million contracts traded.
TREASURY REFUNDING / STOCK MARKET WARNING
The Week Ahead: August 10–14, 2026
The week includes a major $125 billion Treasury refunding package, featuring auctions of 3-year notes, 10-year notes and 30-year bonds.
Date | Treasury Auction | Amount | Time |
|---|---|---|---|
Monday, Aug. 10 | 13-week and 26-week bills | Regular weekly auctions | 11:30 a.m. ET |
Tuesday, Aug. 11 | 3-year note | $58 billion | 1:00 p.m. ET |
Tuesday, Aug. 11 | 6-week bill | Regular weekly auction | 11:30 a.m. ET |
Wednesday, Aug. 12 | 10-year note | $42 billion | 1:00 p.m. ET |
Wednesday, Aug. 12 | 17-week bill | Regular weekly auction | 11:30 a.m. ET |
Thursday, Aug. 13 | 30-year bond | $25 billion | 1:00 p.m. ET |
Thursday, Aug. 13 | 4-week and 8-week bills | Regular weekly auctions | 11:30 a.m. ET |
Key Market Focus
$58B 3-Year Note → $42B 10-Year Note → $25B 30-Year Bond
The biggest stock-market risk comes from the 10-year and 30-year auctions. Weak demand could push Treasury yields higher and pressure rate-sensitive stocks, particularly technology and other high-valuation growth shares.
The three major coupon auctions total $125 billion and settle Monday, August 17. U.S. Treasury refunding statement
Most important day: Wednesday, August 12. July CPI is released at 8:30 a.m. ET, followed by the $42 billion 10-year auction at 1:00 p.m. ET. The July PPI will be released on Thursday, August 13, at 8:30 a.m.
A hot CPI / PPI followed by weak auction demand could put significant upward pressure on yields and downward pressure on stocks.
There is no doubt China is winning this war…Meet the bot that can dance, clean your home, and replace factory workers.
With the global race for artificial intelligence and robotics technology in full swing, David Muir takes a closer look at the humanoid robots being built in China.
Friday’s MOC opened with an $836.0M buy imbalance, showing $3.0B to buy against $2.1B to sell. The initial dollar lean was +58.1%, while the symbol lean was +52.0%, with 358 stocks to buy versus 331 to sell. That made the opening constructive, but still relatively rotational rather than a broad wholesale buy program.
The character of the MOC strengthened quickly. The imbalance slipped to $594.0M at 15:52 before rebuilding to $866.0M at 15:53, $1.8B at 15:54 and a session-high $2.2B at 15:55. Dollar lean crossed into notable territory at +66.6% at 15:54 and reached +68.9% at 15:55 and 15:56. After briefly cooling to +62.6% at 15:58, buying accelerated again, with the dollar lean jumping to +74.4% at 15:59 and finishing at +78.5%. The final imbalance was $1.1B to buy.
NASDAQ was the clearest wholesale buyer at the opening, posting a +68.1% dollar lean and +74.0% symbol lean. The S&P 500 was positive but more rotational at +55.7% dollars and +53.6% symbols, while NYSE breadth actually leaned slightly toward sellers.
Sector flow showed concentrated institutional buying. Consumer Staples carried a +76.3% dollar lean, Real Estate +76.6%, and Materials +73.5%. Information Technology produced the largest net buy at $482.7M and showed exceptionally strong +74.1% symbol breadth. Energy stood out on the sell side with a -66.7% symbol lean.
Individual selling was concentrated in MSFT at $228.6M, NVDA $113.8M, AAPL $96.1M and JPM $74.0M. Buyers favored SPCX at $135.2M, AMD $98.0M, INTC $91.9M, TJX $90.4M and AMAT $79.6M. Overall, the MOC transitioned from a modest rotational buy into a distinctly dollar-driven buy program by the close.
Technical Edge
Daily Breadth Data 📊
For Friday, August 7, 2026
NYSE Breadth: 69% Upside Volume
Nasdaq Breadth: 69% Upside Volume
Total Breadth: 69% Upside Volume
NYSE Advance/Decline: 66% Advance
Nasdaq Advance/Decline: 67% Advance
Total Advance/Decline: 66% Advance
NYSE New Highs/New Lows: 84 / 45
Nasdaq New Highs/New Lows: 274 / 112
NYSE TRIN: 0.88
Nasdaq TRIN: 0.91
Weekly Breadth Data 📈
For Week Ending Friday, August 7, 2026
NYSE Breadth: 58% Upside Volume
Nasdaq Breadth: 67% Upside Volume
Total Breadth: 64% Upside Volume
NYSE Advance/Decline: 62% Advance
Nasdaq Advance/Decline: 72% Advance
Total Advance/Decline: 69% Advance
NYSE New Highs/New Lows: 312 / 160
Nasdaq New Highs/New Lows: 669 / 411
NYSE TRIN: 1.18
Nasdaq TRIN: 1.26
BTS Levels - (Premium Only)
Today’s Important Economic Events
DTG Room Preview – Monday, August 10, 2026
Market Tone
US equity futures are cautiously constructive as traders balance easing geopolitical pressure against higher bond yields.
ES and NQ remain headline-sensitive, with inflation data and AI-related developments likely to drive direction this week.
Asian markets were firmer overnight, supported by improved tech sentiment and renewed semiconductor demand.
Oil & Geopolitics
Oil is modestly higher as uncertainty around the Strait of Hormuz continues.
Markets remain cautious despite easing rhetoric around the Gulf situation.
Any renewed disruption could quickly lift crude prices and tighten financial conditions.
Rates & Inflation
Equities have continued to push higher despite rising bond yields.
That divergence remains a risk, particularly for tech and discretionary stocks.
CPI and PPI later this week could increase rate volatility if inflation shows renewed stickiness.
AI & Mega-Cap Tech
AI infrastructure remains a key market theme, with concerns growing around data-center reliability, power demand, capex requirements, and margins.
Google remains in focus following leadership and strategic changes at DeepMind.
Meta’s new coding agent adds to the AI-tooling arms race.
Security concerns involving AI agents could weigh on enterprise adoption.
Expect continued rotation and elevated volatility across AI-exposed names.
Earnings
Premarket: Barrick Mining (B), KSPI, KEP
After the close: ALC, CIB, SPG
Tuesday AM: ARMK, CAH, ESLT, IHG, ONON, SEA, TME
Tuesday PM: Super Micro Computer (SMCI) is the key focus.
ES Volatility & Structure
Volatility has contracted for a third consecutive session as ES trades near its new all-time high.
The ES 5-day average daily range has fallen to 91.75 points, down from 102.25 on Thursday.
Geopolitical developments and President Trump’s social media posts remain potential volatility catalysts.
No whale bias this morning, with overnight large-trader volume too light to be significant.
ES Key Levels
Resistance: 7824–7829
Support: 7620–7615
Additional support: 7447–7452, 7313–7308, 7130–7125
50-day MA: 7550.50 remains loose support