- The Opening Print
- Posts
- TACO Tuesday
TACO Tuesday
Danny Riley
July 07, 2025
Follow @MrTopStep on Twitter and please share if you find our work valuable!
Our View
The ES pushed up to new all-time contract highs off Thursday’s stronger-than-expected US unemployment report, fueling hopes of further economic growth and improving chances of the Fed cutting interest rates. According to the CME’s Fed fund, the odds of a rate cut rose from a 5% probability to 23%.
Everything was clear sailing until the passage of “Trump’s beautiful budget deal,” and the ES dropped down to 6272.50. The ES closed out the week with a gain of 1.7%, the NQ jumped about 1.6%, while the YM jumped 2.3%. All three made new all-time contract highs.
I think if you took a poll of the craziest days of the sell-off and rally, it would have to be Trump’s Liberation Day 7-day 12% sell-off, the April 7th lows when Trump’s approval ratings fell to 43% (some polls were lower, but this was the average), and disapproval rating rose to 53%. Then came the April 9th 90-day tariff pause when the YM rallied 2,960 points and the ES jumped almost 9.5%, and the NASDAQ jumped 12%, and then each dropped 2.5%, 3.4%, and 4.3%, respectively, the next day.
There is no doubt about it: the public was pissed off and panicking. I can’t lie, I thought he was crazy too, but there was always this part of me that said, wait—he has Scott Bessent, Howard Lutnick (Head of Cantor Fitzgerald), and Jeffrey Gundlach (bond king), and they must know how this is going to play out.
Why am I writing this now? Well, I think he has done a great job turning things around. The China trade deal, the Vietnam trade deal, the European Union seeking an ‘agreement in principle’ (which the US will probably agree to), and now warning countries without a deal to expect 70% tariffs. Hamas says it’s ready to immediately enter negotiations on the mechanism for implementing the deal, and Hezbollah says it will disarm when Israel leaves southern Lebanon. The BRIC nations are meeting to further their cause, with India saying they will continue to deal with the dollar.
Sunday afternoon, this headline hit the tape: Bessent: “Tariffs will ‘boomerang’ back to April levels by Aug. 1 for countries without deals”. It’s a never-ending shell game.
There is no doubt that Trump is a dealmaker, and there is no doubt that the stock markets have made new all-time contract highs and are more than likely still going up. But the dollar is down 10.8% in the first six months of the year—its worst performance since the 1970s—and the losses are across the board, with the greenback falling against 19 of the 23 most-traded emerging-market currencies, and by at least 10% against 10 of them.
Bond and note yields remain elevated, with a high level of uncertainty and declining global perception. According to one survey in April 2025, the proportion of people saying America will have an overall positive influence on world affairs has fallen in 26 out of the 29 countries surveyed. The US’s net global perception rating dropped from +22% in 2024 to -5% in 2025, just above Russia’s rating. Reuters reports that global perceptions of the US have fallen below China, according to one survey.
This is going to be much harder to rebuild than the recent new highs in the US indices. As they say, two-thirds of reality is perception.
Over the weekend, JP Morgan’s Jamie Dimon warned that poor governance, not China, could erode US leadership. He said the real opponent of the US is “the enemy within,” pointing to stalled infrastructure, ballooning city pensions, and multiyear permit delays. Using California’s high-speed rail project as an example, he argued that domestic inefficiencies, like cost overruns and bureaucratic delays, undermine US competitiveness more severely than any foreign adversary.
The week ahead has no scheduled economic reports or Fed speak, and the rest of the week has a very low level of economic reports. Tuesday has two reports: the NFIB Optimism Index at 6:00 am and Consumer Credit at 3:00 pm. Wednesday’s lone report is Wholesale Inventories at 10:00 am, and the May Fed Minutes at 2:00 pm. Thursday, Initial Jobless Claims at 8:30 am, St. Louis Fed President Alberto Musalem’s speech at 10:00 am, and San Francisco Fed President Mary Daly’s speech at 2:30 pm. The Monthly US Federal Budget is on Friday at 2:00 pm.
Obviously, the main event this week is Trump’s Taco Tuesday, and I think there is going to be an exceptionally high level of headlines, which will create knee-jerk reactions. Am I surprised by the rip? No, it has been doing the same thing almost every day. The ES has closed higher on 41 out of the 62 trading days since April 7, 2025. I’m not sure how you can fight that, nor do I think you should.
I, for one, have to give credit where credit is due, but Trump skunked everyone. I didn’t hear one person say this was going to happen, but like I said, I must give credit where it’s deserved, and Rich Miller from @HandelStats told me when the ES was trading around 5500 that the ES was going to “have a big rally and take out the highs that it could go to 6200 or 6300.”
While he has not fully explained it, I think the work on his algorithmic trading program was reaching new levels at the end of last year and early this year, but the level of improvement is amazing. Like I said, he is still manually coding, but I think his AI bot is connected to his Microsoft Windows spreadsheets, and he has mastered it.
When I say mastered it, I mean mastered it. The higher quality of the directional calls and levels has been outstanding. Three weeks ago, he told me that he thought there was another 20% on the upside and chipped away almost 4% of that call. Even if Rich is wrong about the 20%, he has still called the decline and the rally as well as anyone I know. And that is the truth.
"America First is fine, as long as it doesn’t end up being America alone," Dimon wrote in his April shareholder letter, stressing that the U.S. cannot lead globally if it is paralyzed domestically. In the letter, Dimon urged Congress to streamline permits, upgrade the grid, and restore bipartisan discipline.
I am sure by the time today’s OP gets posted, there will be more headline news. We could be in for some bumps and dumps this week as we get a better look at the “good, the bad, and the ugly” parts of Trump’s tariff wars. For sure, Trump will be toting his wins and destroying the unsigned deals or losers.
Beyond this week, the Q2 earnings kick into gear next week. S&P 500 earnings growth rate in Q2 2025 is estimated to be around 5%, down from 9.4% at the start of the quarter. This would be the lowest earnings growth reported by the S&P since Q4 2023. According to FactSet, analysts made larger-than-average cuts to EPS during the quarter, and $4.7 trillion in options expiring during next week’s options expiration.
MiM and Daily Recap
Data from Friday’s 4th JULY globex only session
Thursday July 3rd Cash Session
The abbreviated Thursday overnight Globex session opened at 6276.50 with a little bit of weakness out of the gate. Around 10:30 pm, price found a low of 6270.50, pulling back 9.25 ticks from a 10:15 pm high of 6279.75. From the 10:30 PM low, Globex made a series of higher highs, and at 3:15 AM printed a price of 6285. From there, there was some profit taking and weakness with ES striking a pre-market low of 6272.50 down 12.50 (.20%) from the 3:15 AM high. The market found a strong pace to go higher, opening the cash session at 6293.25, up 17 points from the Globex open. From there, the market embarked on a steady climb through the morning hours. A notable surge carried ES to 6328.25 by 11:06 AM, marking a 49.75-point gain (+0.79%) from the premarket low.
Momentum briefly faded into a mild pullback as price retreated to 6322.00 at 11:27 AM, shedding 6.25 points (-0.10%). Buyers soon returned, propelling futures to a fresh high of 6331.25 by 11:45 AM. This level held only briefly before a second, smaller dip took ES to 6325.50 at 12:18 PM, another contained decline of 5.75 points (-0.09%). The final upward push unfolded just before the early afternoon, printing the session’s intraday high of 6333.25 at 12:42 PM, which stood as the high water mark before the shortened trading day began winding down.
Afternoon action was largely subdued, with prices drifting modestly off the peak. A mild selloff into the closing hour took ES to a late low of 6313.00 by 1:01 PM ET, amounting to a 20.25-point pullback from the high. The session ultimately settled at 6324.25, representing a 49.25-point advance (+0.78%) over Wednesday’s settlement.
Volume was considerably lighter than a full session, totaling 678,530 contracts across Globex and the regular session.
Overall sentiment during the abbreviated session was constructive, leaning modestly bullish as dip buyers stepped in multiple times to defend intraday pullbacks. The market demonstrated resilience after overnight weakness, as ES regained ground lost during Globex and extended gains into the midday high. Notably, the $C–C comparison showed a net loss of 40.00 points (-0.63%) over the full session, due mainly to Globex softness prior to the cash open.
Market-on-Close (MOC) and MiM data reflected a sizable imbalance favoring the buy side, with total imbalance dollars reaching $993 million. The left meter showed dollar imbalance just above the notable threshold at 66.7%, while the symbol percentage closed at 62.7%, signaling a moderate but not extreme buy skew. Although the imbalance did not exceed the ±66% symbol threshold for strong directional conviction, it contributed to steady bids in the final hour before the early close.
Heading into the Friday holiday Globex-only session, the S&P futures market remained near recent highs, with relatively contained volatility as traders prepared for the long weekend.
Technical Edge
Fair Values for July 7, 2025:
SP: 46.42
NQ: 196.9
Dow: 273.69
Daily Breadth Data 📊
For Thursday, July 3, 2025
• NYSE Breadth: 68.61% Upside Volume
• Nasdaq Breadth: 75.32% Upside Volume
• Total Breadth: 74.67% Upside Volume
• NYSE Advance/Decline: 69.62% Advance
• Nasdaq Advance/Decline: 67.54% Advance
• Total Advance/Decline: 68.33% Advance
• NYSE New Highs/New Lows: 186 / 7
• Nasdaq New Highs/New Lows: 317 / 38
• NYSE TRIN: 0.98
• Nasdaq TRIN: 0.66
Weekly Breadth Data 📈
For the Week Ending July 3, 2025
• NYSE Breadth: 68.92% Upside Volume
• Nasdaq Breadth: 64.73% Upside Volume
• Total Breadth: 66.43% Upside Volume
• NYSE Advance/Decline: 79.89% Advance
• Nasdaq Advance/Decline: 71.24% Advance
• Total Advance/Decline: 74.50% Advance
• NYSE New Highs/New Lows: 267 / 44
• Nasdaq New Highs/New Lows: 503 / 188
• NYSE TRIN: 1.70
• Nasdaq TRIN: 1.32
BTS Levels - (Premium Only)
Calendars
Today’s Economic Calendar
This Week’s Important Economic Events
Today’s Earnings
Recent Earnings
Room Summaries:
Polaris Trading Group Summary - Thursday, July 3, 2025
Market Overview & Pre-Market Setup
Before the regular trading hours (RTH), price action was already strong, moving into the upper target zone outlined in the DTS Briefing.
David shared a Bull Scenario: If price held above 6275, the target was 6285–6290.
This scenario played out quickly—6285 was tagged by 8:10 AM and 6290 shortly after, showing strong follow-through.
Economic Data Impact
June Payrolls Report:
Strong upside surprise with 147,000 jobs added.
Unemployment rate fell to 4.1%.
Full-time jobs rose sharply (+282,000), while part-time jobs fell.
Bond yields jumped (2-year UST +10bps), and the chance of a Fed rate cut in September dropped from 98% to 80%.
The strong data fueled bullish momentum early in the session.
Trade Execution Highlights
Cycle Day 2 breakout: Confirmed a continuation of the bullish trend.
Open Range Trades:
NQ (Nasdaq futures): Target 1 filled successfully.
ES (S&P futures): Target 1 filled successfully.
Later in the session, momentum slowed, but David emphasized that bulls remained in control and encouraged staying long.
Trading Psychology and Lessons Learned
David shared reminders about the dangers of FOMO (fear of missing out) and staying patient.
Reinforced the discipline of scenario planning—knowing exactly what to do in advance rather than reacting emotionally.
Trading theme of the day was “DREAMS”, highlighting focus and mindset.
Additional resources were shared for mindset training, including Dr. Brett Steenbarger’s material on trading psychology.
Closing Remarks
The day wrapped up with targets met on both NQ and ES trades, validating the plan and preparation.
David wished everyone a Happy 4th of July holiday and noted the room would return to trading on Monday.
Key Takeaways
Clear pre-market preparation allowed traders to capitalize on the early bullish move.
Strong economic data did not derail the plan because scenarios were established in advance.
The importance of having a process and sticking to it was emphasized throughout the session.