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The War and Higher Interest Rates
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There is no doubt that the U.S./Iran war is at the highest level since the war began on February 26. While Iran war mediators are pushing for a new ceasefire, an Iranian ballistic missile attack on a Jordanian air base that killed two U.S. service members struck prefabricated housing units where troops lived and slept. Yemen’s Iran-backed Houthi militia Monday announced a blockade of Saudi shipping amid a standoff with the kingdom.
I read something Sunday night that mediators were working Monday to push the U.S. and Iran into a new ceasefire before the conflict widens, after the U.S. carried out its 9th consecutive night of attacks and Iran struck back, hitting U.S. allies Kuwait and Bahrain. Another two vessels in the Strait of Hormuz were hit by projectiles.
Meanwhile, the Philippine military accused China’s coast guard of allegedly injuring a Filipino sailor during an incident in a disputed shoal in the South China Sea, and a Russian missile struck a ship carrying corn near Ukraine's southern port of Odesa, killing 10 people.
My own opinion is that the U.S. and Iran will get back to the negotiating table, but I don't think a ceasefire is coming anytime soon, which will continue to be a stock market disruptor.
Our Lean — Danny’s Trade (Premium only)
The ES traded in a 7482.00 to 7545.25 Globex trading range and opened Monday's regular session at 7534.50, up 37.50 points, or +0.50%.
After the open, the ES traded 7532.75 and rallied 19.25 points up to 7552.00 at 9:45. It then sold off 46.00 points down to 7506.00 at 10:15, rallied 16.75 points up to 7522.75 at 10:30, and sold off 21.75 points down to 7501.00 at 10:45. The ES rallied 31.00 points up to 7532.00 at 12:00, sold off 23.75 points down to 7508.25, and rallied 17.75 points up to 7526.00 at 12:45. It then sold off 26.75 points down to 7499.25 at 1:30 and rallied 18.50 points up to 7517.75 at 2:20. The ES sold off 39.75 points down to a new low at 7478.00 at 3:15, rallied up to 7497.25 at 3:42, and sold off down to 7492.00. It traded 7494.25 as the 3:50 cash imbalance showed $4.8 billion to sell. It sold off 14.00 points down to 7480.25 at 3:58 and traded 7486.00 on the 4:00 cash close.
After 4:00, the ES traded down to 7475.75 at 4:32 and settled at 7483.25, down 14.50 points, or -0.19%. The NQ traded 28,777.00, down 3.75 points, or -0.01%. From its high to low, the NQ fell 482.75 points. The YM traded 52,111.00, down 14.50 points, or -0.50%, and the RTY traded 2,956.30, down 17.30 points, or -0.58% on the day.
In the end, the ES and NQ looked great after gapping higher and rallying, but the rally was knee-capped by Middle East tensions and weak Treasuries. In terms of the ES’s overall tone, the NQ weakness overpowered the ES. In terms of the ES’s overall trade, volume was steady at 1.298 million contracts traded.
Market-on-Close Recap
The MOC opened with a substantial $4.9 billion sell imbalance. Sell orders totaled $6.9 billion against $2.0 billion to buy, producing a -77.6% dollar lean. That reading was well beyond the -66% threshold and indicated wholesale selling by dollar value. However, the symbol count told a more rotational story, with 350 stocks showing buy imbalances versus 337 showing sells, creating a +50.9% symbol lean.
The sell imbalance remained heavy through the early updates. It improved to $4.2 billion at 15:52, widened slightly to $4.4 billion at 15:53, and held near $4.0 billion through 15:55. The pressure then began to unwind more noticeably, falling to $2.3 billion at 15:56. After briefly increasing to $3.8 billion at 15:57, the imbalance steadily improved to $2.4 billion at 15:58, $1.7 billion at 15:59, and $1.0 billion by 16:00. The dollar lean remained firmly sell-oriented at -78.0% into the close, while the symbol lean finished at -62.3%, showing that selling became broader late.
Technology carried the largest sell pressure. Information Technology posted a $3.3 billion net sell imbalance with a -90.7% dollar lean. Communication Services followed with $691.7 million to sell and a -90.2% lean. Consumer Discretionary showed $354.8 million to sell with a -76.1% lean, while Energy recorded $134.8 million to sell with a -70.6% lean. Industrials, Health Care, and Materials were also net sellers.
The largest individual sell imbalances included NVDA at $533.5 million, MSFT at $485.4 million, AAPL at $465.2 million, MU at $452.9 million, AVGO at $388.1 million, and AMZN at $293.3 million. META, GOOG, INTC, GOOGL, and AMD also appeared prominently on the sell side.
Buying was concentrated in SNDK, MS, ACN, NFLX, CRM, PH, ETR, V, PGR, and IBM. Real Estate, Utilities, and Consumer Staples were the only sectors showing meaningful net buying.
Daily Market Recap 📊
For Monday, July 20, 2026
NYSE Breadth: 38% Upside Volume
Nasdaq Breadth: 45% Upside Volume
Total Breadth: 44% Upside Volume
NYSE Advance/Decline: 37% Advance
Nasdaq Advance/Decline: 36% Advance
Total Advance/Decline: 36% Advance
NYSE New Highs/New Lows: 53 / 48
Nasdaq New Highs/New Lows: 64 / 232
NYSE TRIN: 0.74
Nasdaq TRIN: 0.69
Weekly Breadth Data 📈
For Week Ending Friday, July 17, 2026
NYSE Breadth: 48% Upside Volume
Nasdaq Breadth: 44% Upside Volume
Total Breadth: 45% Upside Volume
NYSE Advance/Decline: 53% Advance
Nasdaq Advance/Decline: 39% Advance
Total Advance/Decline: 44% Advance
NYSE New Highs/New Lows: 296 / 119
Nasdaq New Highs/New Lows: 445 / 510
NYSE TRIN: 1.25
Nasdaq TRIN: 0.82
ES & NQ Levels (Premium only)
BTS Levels are an OP Premium Feature.
Polaris Trading Group Summary - Monday, July 20, 2026
The session began with strong overnight bullish momentum and several successful morning trade opportunities, including a fulfilled upside target, a completed gap fill, and a premium short that reached its second target. However, market control shifted to sellers late in the day, leaving ES near key support and closing in a weaker position heading into Cycle Day 3.
Overnight and Early Session
ES began the day with a strong bullish tone.
The key 7480 Line in the Sand held overnight.
Buyers pushed price toward the pre-RTH target near 7525.
David noted that continued momentum could open the door to 7550–7565.
Morning Trade Activity
David began scaling into an A4 long.
A room member identified and executed a classic BLT setup near 7450.
The trade reinforced the value of:
Watching premium and discount signals.
Marking important horizontal levels.
Looking for contrarian entries at structured locations.
Gap Fill and Premium Short
David identified 7509 as the trigger that would place the gap fill in play.
Price tagged the level and completed the gap fill.
A premium short performed well and reached its second target.
David then defined the active trading sandbox as approximately:
7510–7530
With some flexibility above and below the range.
Afternoon Shift in Market Control
The bullish tone weakened significantly later in the session.
By the final hour, David noted that the bulls had lost control.
Bulls needed to reclaim the 7495–7498 zone to improve their position.
Price retested the Cycle Day 1 low near 7473.
The broader 7470–7480 area remained an important support zone.
Closing Action
David warned that repeatedly testing support can weaken it.
A level that holds several times can eventually become a “has-been.”
The market-on-close imbalance showed approximately:
$4.8 billion to sell
Heavy concentration in technology stocks.
Prices closed in the lower quartile of Cycle Day 2.
This left bulls in a difficult position heading into Cycle Day 3.
Positive Trades and Calls
7480 support held overnight.
The 7525 upside target was fulfilled before RTH.
The BLT setup produced a successful room trade.
David correctly anticipated the gap fill after 7509 was tagged.
The premium short reached its second target.
The 7510–7530 sandbox provided a useful framework for the midday session.
Lessons Learned
Strong overnight momentum does not guarantee a bullish close.
Market control can change quickly during the session.
Premium and discount signals are most useful when combined with:
Key price levels.
Established setups.
Disciplined risk management.
Repeated tests can weaken support or resistance.
Defined trading zones help prevent emotional chasing.
Large closing imbalances can strongly influence late-day price action.
Overall Takeaway
The day began with bullish momentum and several accurate calls.
The morning produced the best trade opportunities.
Sellers took control late in the session.
The weak close suggested that bulls could face additional pressure during Cycle Day 3.
Discovery Trading Group Room Preview – Tuesday, July 21, 2026
Index Futures
US equity futures are firmer, led by strength in semiconductors and mega-cap technology.
The rebound is helping stabilize the Nasdaq and restore momentum to AI-linked sectors.
Market breadth remains uneven, so continued tech leadership will be important.
ES and NQ are both trading near key inflection points.
Trade and Tariff Risk
New 50% tariffs on Canadian autos, dairy, and alcohol are back in focus.
The measures could increase costs, disrupt supply chains, and trigger retaliation.
Global cyclicals may face pressure, while domestic-focused sectors could benefit at the margin.
Any Canadian response could quickly increase market volatility.
Oil and Geopolitics
Brent crude is moving higher as US–Iran tensions add a geopolitical premium.
A prolonged disruption through the Strait of Hormuz could push prices sharply higher.
Rising oil prices would increase inflation concerns and pressure transportation, manufacturing, consumer, and technology sectors.
Energy shares may outperform if crude continues to strengthen.
Rates and Liquidity
The Treasury’s growing reliance on short-term issuance is increasing sensitivity to front-end rate volatility.
Higher short-term yields could tighten financial conditions and pressure equity valuations.
Traders should closely monitor front-end Treasury moves.
Semiconductors and AI
South Korea’s AI-chip expansion is facing power and water constraints.
Global demand for AI compute continues to strain available capacity.
TSMC remains optimistic about multi-year AI-chip demand.
Capacity limits could support pricing power but also restrict near-term production growth.
Semiconductors remain a key driver of index direction.
Mega-Cap Tech
Apple is trading cautiously ahead of earnings despite a bullish Bank of America outlook.
Elevated expectations across AI and mega-cap technology increase the risk of sharp reactions to earnings misses.
Alphabet’s report after the close will be a major catalyst for AI sentiment.
Earnings Calendar
Before the open: MMM, ALLY, DHI, EFX, GM, GPC, HAL, HAS, KEY, MSCI, MLI, NOC, NVS, SYF, SCHW, and VMI.
After the close: Alphabet, NLY, COF, CB, EQT, IBKR, and URI.
Wednesday morning: T, SAN, CME, EQNR, FCX, GEV, MCO, NEE, NTRS, NVR, OTIS, PM, PHM, RCI, RPM, SF, TEL, TDY, and WAB.
Economic Calendar
Conference Board Leading Index at 10:00 a.m. ET.
The broader US economic calendar is light.
Volatility and Positioning
Volatility remains moderately elevated.
The ES five-day average daily range is 79.75 points.
Geopolitical risks and political headlines could quickly inject additional volatility.
Whale bias is leaning bearish into the US open on light overnight large-trader volume.
ES Technical Levels
ES remains in a short-term bearish structure.
The contract retested its 50-day moving average at 7536.50 overnight after failing there Monday.
Bulls need to reclaim the 50-day moving average to improve momentum.
Resistance sits near the short-term bearish trendline at 7631/26.
The next notable trendline support is near 7409/14.
The 200-day moving average remains well below at 7123.50.
