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The Bond Pit Is Screaming: Buy the Pullbacks, but Don’t Trust the Pop
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It’s 8:50 a.m. Saturday morning. I want to get the Opening Print done for two reasons. The first is I want to hit it while everything is still fresh in my mind, and second, I am speaking at an event in Frankfurt, Germany, in September, and I want to work on my presentation. I know that may sound funny, but I have two speaking engagements, and I want to get them done so I can refine them.
How to Exit a Losing Trade
As the war with Iran grinds into its sixth month, Trump is back teaming up with Israel to mount fresh attacks. One of the things that makes a great trading company like Goldman Sachs or JP Morgan—or, for that matter, a smart government—is that they have planners. They don’t jump into deals without researching both the upside and downside.
Like or don’t like China, they have state planners at all levels. They do not think in terms of days or weeks or even months; they think in terms of five years, 10 years, 20 years, or even 50 to 100 years and how their policies will work or play out.
This is the same thing many of the great trading firms do. They do front- and back-end research, and if their research determines the idea is good, they have an out if it doesn’t work. In most cases, they have a pre-planned exit strategy, which Trump doesn’t seem to have.
After ordering massive strikes again over the weekend, he TACOed again after Gulf States pressed him to hold off on military strikes against Iran and pursue diplomatic talks after mediators reported that Tehran signaled openness to a new plan for reopening the Strait of Hormuz.
Iran’s Chokehold
Global energy supplies are tightening, with onshore oil inventories falling sharply and Europe facing growing shortages in natural gas, diesel, and heating oil.
OECD oil stocks dropped 62 million barrels in June—including roughly 44 million barrels released from government reserves—while China’s crude inventories fell about 41 million barrels. U.S. commercial crude inventories remain 6% below their five-year average, gasoline 7% below, and distillates 10% below.
Europe is the greatest concern, with natural-gas storage only 54%–55% full—the second-lowest late-July level in roughly 15 years—and the region may struggle to reach its relaxed 80% winter target. Europe is also competing with Asia for LNG, while Middle Eastern disruptions and restricted Russian supplies are tightening the market.
Europe is not running out of crude, but its diesel and heating-oil inventories are near multiyear lows. U.S. natural-gas supplies remain healthier, with storage at 3,084 Bcf and production near record levels.
Overall, global oil buffers and Europe’s energy reserves are unusually thin, leaving markets vulnerable to further disruptions or a severe winter.
Our View
ZBU26 vs. CLU26
While I said the only other times I saw the markets make wild moves like we are seeing today were the 2007–2008 Credit Crisis and the 1999–2000 tech bubble, I actually think it’s more than that.
I compare it to a giant rubber band that got way too stretched out one way and is now getting stretched out the other way, which potentially has a lot more downside stretching to do.
If I could only pick one major concern, it’s the U.S. Treasury markets. I said the other day that when I worked in the bond pit, the futures were trading at 84.00, and in 2020, the bonds traded up to 193.06. Friday’s low was 108.08.
They have dropped 84 points and 30/32nds, or 2,718/32nds, or 43.97%. In the last 23 sessions, the bonds have been down 16 and up seven and have lost 5 points and 27/32nds, or 187/32nds, or 5.12%.
Friday, the 30-year U.S. Treasury yield reached a 19-year high, and now traders see a roughly 70% chance that the Fed will tighten at its next meeting in September. In October, the month before the pivotal U.S. midterm elections, a hike is fully priced in.
Today is the first trading day of August, and like many recently, I expect it to be volatile. On the economic side of things, there are 13 economic reports and one Fed speaker.
According to FactSet, 61% of S&P 500 companies had reported second-quarter earnings as of July 31, with 86% beating earnings estimates and 77% exceeding revenue expectations. 136 S&P 500 companies are scheduled to report during the week, with the most market-moving reports being $AMD, $LLY, $PLTR, $CAT, $DIS, and $UBER.
Our lean: In the world of the on-again, off-again U.S.-Iran peace negotiations, they are back on. I think there are a lot of people who went home short thinking the U.S. was going to do a massive attack, and now that it’s on hold, oil should be down and the ES and NQ should be higher. While I can’t rule out selling a big pop, I’m looking to buy the pullbacks.
In the world of never a dull moment, the ES traded in a 7468.25 to 7517.75 Globex trading range and opened Friday’s regular 9:30 ET session at 7499.00, up 26.50 points, or +0.35%.
After the open, the ES traded up to 7515.50, sold off 88 points down to 7427.50 at 10:00, rallied 53.75 points up to 7481.25 at 10:45, sold off 32 points down to 7449.25 at 11:30, rallied 35.75 points up to 7485.00 at 12:00, and pulled back to 7475.75.
The ES rallied 13.13 points up to 7488.88, pulled back to 7479.00 at 12:15, rallied 17 points up to 7496.00, pulled back to 7492.50, rallied 8.50 points up to 7501.00 at 12:30, pulled back to 7491.25 at 12:45, rallied 11.75 points up to 7503.00 at 12:45, and pulled back to 7496.50.
The ES rallied 20.50 points up to 7517.00 at 1:30, pulled back to 7507.50, rallied up to a lower high at 7513.00, pulled back to 7503.25 at 1:45, rallied 27.75 points up to 7531.00 at 3:20, sold off 11 points down to 7520.00 at 3:30, and rallied 17 points up to 7537.00 at 3:48.
The ES traded 7536.75 as the 3:50 cash imbalance showed $2.5 billion to buy, rallied up to 7540.00, sold off down to 7530.50, rallied back up to a new high at 7541.00, and traded 7520.00 on the 4:00 cash close.
After 4:00, the ES traded down to 7514.75 and rallied back up to 7521.75 at 4:15. At 4:40, this headline hit: “U.S. and Israel Weigh Weekend Strikes on Iranian Energy Sites.”
The ES sold off down to 7499.00 and settled at 7511.50, up 39.00 points, or 0.52%; the NQ settled at 28,467.00, up 229.25 points, or 0.81%; the YM settled at 52,610, up 230 points, or 0.44%; and the RTY settled at 2925.00, up 9.60 points, or 0.33% on the day.
In the end, the ES and NQ had a nice rally Thursday and on Globex into Friday’s open, but there was news that Japan spent up to $59 billion buying yen after it neared a 40-year low, adding fears of Japan selling U.S. Treasuries, along with another potential BOJ rate hike. This pushed U.S. Treasury futures lower, lifting the 10-year yield to roughly 4.70% and the 2-year yield near 4.28%, which caused the Nasdaq to drop 646 points and the ES to go down.
In terms of the ES’s overall tone, it was up, it was down, it was up again, and it fell again after the 4:00 cash close. In terms of the ES’s overall trade, volume was on the higher end at 1.73 million contracts traded.
Technical Edge
Daily Breadth Data 📊
For Friday, July 31, 2026
NYSE Breadth: 46% Upside Volume
Nasdaq Breadth: 59% Upside Volume
Total Breadth: 55% Upside Volume
NYSE Advance/Decline: 47% Advance
Nasdaq Advance/Decline: 46% Advance
Total Advance/Decline: 46% Advance
NYSE New Highs/New Lows: 47 / 65
Nasdaq New Highs/New Lows: 93 / 228
NYSE TRIN: 1.07
Nasdaq TRIN: 0.58
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
BTS Levels - (Premium Only)
Today’s Important Economic Events
DTG Room Preview – Monday, August 3, 2026
Macro Backdrop
US equity futures are firmer as geopolitical tensions ease and crude oil prices fall.
Lower energy costs are supporting rate-sensitive sectors and improving sentiment across cyclicals and technology.
Markets remain highly sensitive to Iran-related headlines and any renewed spike in oil.
Rates and Fed
Treasury yields are rising despite the Fed holding rates steady.
Higher yields remain a headwind for technology and discretionary valuations.
Front-end rates should remain a key intraday signal for ES and NQ.
Earnings Focus
Market attention is broadening from software and AI into infrastructure, industrial and space-related themes.
Palantir reports after the close, with guidance on government, defense and enterprise AI demand in focus.
Other notable reports include:
Booking Holdings
Diamondback Energy
Gilead
ON Semiconductor
Vertex
Tuesday morning highlights include:
Caterpillar
McDonald’s
Pfizer
Spotify
Several major industrial and energy companies
Economic Calendar
9:45 a.m. ET: S&P Global Manufacturing PMI
10:00 a.m. ET:
ISM Manufacturing PMI
ISM Manufacturing Prices
Construction Spending
Market Bias
Whale bias is slightly bullish.
Overnight large-trader volume is light to moderate.
Volatility contracted Friday but remains elevated.
Bullish Structure
ES has formed a potential inverted head-and-shoulders pattern.
The 7437–7442 area is acting as the neckline and key support.
Holding above this zone keeps the broader setup constructive.
A confirmed breakout could open a move toward 7700.
50-Day Moving Average
The 50-day moving average near 7531 capped Friday’s advance.
ES reclaimed the level overnight.
Holding above 7531 would support the bullish case.
A move back below it could signal that the overnight rally was only a failed probe.
Key Levels
Resistance: 7618–7623, then 7855–7860
Support: 7437–7442, 7416–7421, 7318–7321, 7270–7275 and 7135–7140
