Monday Takeaways: Time to Raise Stops as “Buy the Rumor, Sell the News” Kicks In

Shah Gilani|July 7, 2025

“Holy mackerel, this is a beautiful thing.”

That’s how I described the market’s chart last week as the S&P hit fresh all-time highs.

It looks like “a rocket taking off” – and you don’t want to stand in its way.

But here’s why I’m getting more cautious…

The warning signs are stacking up:

• Most of the good news is already out and priced in
• Rumors have been floating for months about trade deals
• Classic “buy the rumor, sell the news” setup is forming
• Futures are down this morning as uncertainty returns

I’m not overly concerned yet – this momentum can continue. But it might be time to raise stops a little and prepare for some profit-taking.

I’ll explain why even in this “absolutely fantastic” market environment, smart money knows when to get more defensive, and share the key levels to watch as we head into a potentially “sloppy” week.

Click on the image below to see where this rocket heads next.

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Transcript

Good morning, everybody. Shah Gilani here with your Monday Takeaways. It’s about a half hour before the opening. Futures are down a little bit, and it’s all about, perhaps, selling the news because markets have been on a tear.

Last week was no different. The Dow was up 2.3% last week, the S&P up 1.7% last week, and the Nasdaq Composite up 1.6%. The takeaway from that is, yes, momentum has been with equities.

The bond market was a little sloppy, and we probably know why. Well, we’ve got tariffs, with deadlines coming up, maybe extensions, maybe the president will slap additional tariffs on something like 100 countries – that’s the expectation.

Smaller trade partners with the United States who don’t do a whole lot. They don’t really move the needle. But the thinking is maybe at least 100 countries will get slapped with 10% or higher tariffs. The big economies that we are negotiating with are still ongoing.

We’re supposed to have a deal with China. No one has seen any paperwork on it. So the takeaway from that is we have a deal, but we don’t have a deal. So we really don’t have a deal.

Until there’s a deal, we don’t have a deal. Now Wednesday is the deadline. So what’s going to happen up to Wednesday according to Treasury Secretary Scott Bessent? There is a lot of negotiating going on.

He said the next 72 hours – as of yesterday when he was on one of the talk shows on Sunday – 72 hours are going to be really important. There’s going to be a lot of work done, a lot of deal making, he said. So we’ll find out whether or not there really is. But we don’t even have anything. We supposedly have a framework on a Vietnam deal, but nobody’s really sure of the entire scope of the framework because no one’s seen it. So what we have here is a hodgepodge.

In other words, we’ve got this deadline, self-imposed deadline that the president established, which is a 90-day extension from the original Liberation Day tariffs that President Trump slapped on countries. Now this expires on Wednesday. So are countries going to come to the fore? Are they going to play ball?

Are they going to look for extensions? It’s up in the air. Markets don’t like it this morning. The takeaway from uncertainty is markets don’t like uncertainty, and they’re likely to be a little sloppy this week.

But if we see really solid frameworks where we have an understanding of what the trade deal might be – or deals, plural, hopefully, maybe – then the market will, I think, go higher on the understanding at least that some of those unknowns are out of the way. And, again, that remains to be seen. Right now, it’s a stretch to see whether or not the market will get enough certainty to put aside the uncertainty fears that have, for the most part, driven them higher because the expectation is this uncertainty will pass at some point. And in the process, in the time it’s taken for all this to happen, for the 90 days to come to expiration on Wednesday, the markets are like, “Well, something is going to get done, and maybe everything will get done.”

But who cares? Right now, it’s about earnings are still pretty good. The U.S. economy is good.

So let’s just carry on and go higher, and that’s what we’re doing. So another record day on Wall Street. I mean, just the – to me, it’s absolutely fantastic what the market looks like. As far as the chart goes, there’s really nothing you can say other than holy mackerel, this is a beautiful thing. So I’m going to go forward and say this too shall or should continue.

Not a lot going on this week in terms of economic data. We have the Fed minutes coming out on Wednesday.

Don’t know if they’re going to really move markets, probably not going to move the needle.

Now we have unemployment claims on Thursday. There’s going to have to be a really great number or scary number one way or the other, I think, to move markets because it’s really going to be about the Wednesday deadlines. And, again, the deadline for tariff negotiations could come and go, and the markets could expect and probably do expect another extension for most of the countries.

So, yes, the takeaway from all this is the uncertainty that has been with us all along has been rolled over in terms of investors just wanting to bid up stocks that all of a sudden got on sale big time. Now we’re at new highs in the S&P. Now it’s risk on, people. So the takeaway there is you don’t really stand in front of a rolling train.

Is it time to get a little more cautious? I think so, because most of the good news is out. The rumors have been floating, and now the news is coming out. And, again, the old adage is buy the rumors, sell the news.

So whatever the news is, markets have expected this. The rumors have been all over the place. And then when we get some news, maybe it’s time to take some profits off the table. I’m not going to be overly concerned about it. Maybe raise stops a little bit, but the takeaway from what we saw last week in terms of the economy – great.

In terms of the jobs numbers – fantastic.

On the surface, now we’re starting to see a little pushback on that. For quick reference, the jobs created last week, nonfarm payrolls increased by 147,000 for the week. Now the expectation was for 106,000.

Absolutely blew everybody away. The other side of that was the unemployment rate fell from 4.2% to 4.1%. The expectation was for unemployment rate to rise to 4.3%. So, wow, the economy looks like it’s boiling, and it’s just going gangbusters.

That’s all good, except you get underneath and a lot of commentary and a lot of deeper analysis into the numbers proved that, well, wait a second. There’s a lot of government hiring, a lot of seasonality effects in there. And without all those things, the numbers wouldn’t have been as good. So if that’s what we do, we take away what we see in the headlines, and then we kind of get under the covers to see if there’s any other stuff going on there.

And, yes, there was, but markets didn’t seem to care. They loved the headline numbers. So, yes, the only drawback there was, well, if the economy is still going gangbusters, labor market is strong, which the Fed watches, then guess what? There’s likely not going to be a cut coming this month and maybe not in the fall.

So that was only negative for bonds. Of course, bonds got a little bit of a dust-up in there. But nonetheless, stocks said let’s just go higher. So here we are.

Monday, futures are down a little bit. It’s going to be, I think, a choppy week because there’s not a lot to go on other than the tariff news. And those rumors about that may turn into news, which may turn into some selling.

Guess what? It’s going to be a sloppy week. It’s probably a good week to go to the beach. That’s it. I’ll catch you guys next week. Cheers.