Odds for a Rate Hike Go DOWN ⬇️

But does that mean stocks will go up?

Technical Edge 

• NYSE Breadth: 33% Upside Volume 

• Advance/Decline: 42% Advance 

• VIX: ~$17.25

I still think we’re in a “fuzzy” part of the market. We had the big upside push and now some unwind as the AI bonanza cools off. The indices have been choppy too and now we’re in June.

Yesterday, the odds for a rate hike at the Fed’s June meeting dove lower (but a lot of this will depend on Friday’s jobs report). Previously, the market had been anticipating another 25 basis point increase.

Will that be a catalyst for stocks to go higher? Normally I’d say yes, but the market was going higher even when rates were forecasted to go higher. If the dollar (DXY) and 10-year yields (TNX) come under pressure, that all should be a positive for stocks. But we’ll see — it’s been a weird market so far this year.

So much of this rally has been driven by just a few stocks, so it’s hard to be over-committed one way or the other. The bull in me says that we could see some rotation into other sectors and that can help keep the pullbacks limited. The bear in me says that when FAANG + NVDA, MSFT & TSLA fall, so will the market.

S&P 500 — ES

Yesterday, our “bolded” support level was 4175-80, which was the 10-day ema and the 50% retracement. Given that the ES isn’t in a trend, I was putting more weight in the 50% retracement than anything else. It was good for an intraday bounce, but the bulls have more work to do. 

• Upside Levels: 4210-16, 4224-30, 4242-4250

• Downside levels: 4175-ish, 4160, 4135-40

SPY