MARKET ANALYSIS
Here’s All You Need To Know

• The market is starting the week in pause mode rather than full risk-on, and that makes sense after last week’s sequence: a hawkish Fed shock, a chip-led rebound, a U.S. market holiday, and another round of headlines around the U.S.-Iran peace process.

• U.S. futures are little changed this morning, with the S&P 500 slightly lower, the Dow flat, and Nasdaq futures marginally positive. That is not a bearish open, but it is also not the type of broad follow-through we would want to see if the market were fully comfortable with the macro backdrop.

• The main positive is still oil. Early fears around renewed Trump threats and Hezbollah-related tensions pushed crude higher at first, but prices have since reversed lower after mediators said U.S. and Iranian officials agreed on a roadmap to reach a final deal within 60 days.

• Brent is back near the $79-$80 area, while WTI is closer to $75-$76. That is important because oil is no longer behaving like the market is pricing an imminent Strait of Hormuz shock. The risk premium has not disappeared, but the panic phase has clearly cooled.

• The distinction matters. Lower oil helps the inflation narrative, but the Iran deal is still fragile. Trump has threatened renewed strikes if Iran does not rein in Hezbollah, while negotiations are still inside an interim 60-day window. So the market can remove some energy stress, but it cannot fully remove geopolitical risk.

• That leaves the Fed as the bigger issue for equities this week.Last week’s Warsh meeting changed the tone. The Fed held rates steady, but the market is now taking the possibility of another hike more seriously, with expectations pulled forward toward as early as October. Treasury yields are also rising again, with the 2-year yield hitting its highest level since early 2025 and the 10-year pushing back above 4.50%.

• That is the pressure point. Oil has come down, but the bond market is not giving equities a clean green light. If yields continue to rise into the PCE report, long-duration growth can remain vulnerable even if crude keeps drifting lower.

• Thursday’s PCE inflation report is therefore the main macro event of the week. Core PCE is expected to accelerate from April, and after the hawkish Fed meeting, the market will be extremely sensitive to anything that supports the “higher for longer” or “hike later this year” narrative.

• This is why the current setup is not clean risk-on. The market has relief from oil, but not relief from rates.

• The equity backdrop is still resilient, though. The major U.S. indexes finished last week higher after Thursday’s chip-led rebound, with the S&P 500 notching its 11th winning week in 12, while the Nasdaq gained more than 2% on the week.

  Despite the Fed shock and the geopolitical messiness, buyers are still defending the tape.

• Semiconductors remain the key group to watch. Last week’s rebound was led by chips, and this week gives us another important test with Micron earnings on Wednesday. The market wants confirmation that AI-driven memory demand remains strong, especially after the recent volatility in the semiconductor complex.

• If Micron confirms that DRAM and HBM demand are still outpacing supply, it would help support the broader AI infrastructure trade. If the numbers or guidance disappoint, the Nasdaq could quickly lose one of its most important repair engines.

• Asia is still supporting the AI/semiconductor theme at the index level. Japan’s Nikkei hit another record high, while South Korea’s Kospi also finished higher. That keeps the global AI supply-chain story alive, even as the broader market remains uneven.

• SpaceX, however, is giving a more cautious speculative signal. The stock is lower again premarket and is on track for its third straight decline. It remains more than 30% above its IPO price, so this is not a failed IPO story yet, but the tone has clearly shifted from euphoric demand to post-debut digestion.

• That matters because SpaceX has been the market’s most visible speculative thermometer. If it stabilizes, risk appetite can stay intact. If it keeps bleeding lower, it could reinforce the idea that investors are becoming more selective after a very aggressive innovation-led run.

• The U.K. political situation is also worth noting, but more as a background global risk factor than a primary U.S. equity driver. Starmer’s resignation has pushed sterling near 2026 lows, although the initial gilt reaction appears relatively contained. The bigger issue is that global bond markets remain sensitive to fiscal uncertainty, leadership change and policy credibility.

• The clean read for today is that the market is still repairing, but it is doing so under a ceiling.

• Oil is helping. Peace-talk progress is helping. Semiconductors are still the main upside engine. But yields are rising, PCE is ahead, the Fed has not turned friendly, and SpaceX is no longer giving the same clean speculative signal.

• For traders, this remains a selective tape rather than a broad chase environment. The best long exposure still needs to come from groups with real demand, improving relative strength, and clean technical structure. Anything extended or heavily sentiment-driven needs tighter risk management.

• The two biggest tests this week are: PCE on Thursday and Micron earnings on Wednesday.

• If inflation comes in softer and Micron confirms strong AI memory demand, the market can continue repairing. If PCE is hot or Micron disappoints, the combination of higher yields and fragile speculative appetite could quickly bring back the choppy risk-off tone.

Nasdaq

37.62%: over 20 EMA | 50.49%: over 50 EMA | 55.44%: over 200 EMA

• QQQ still carries the risk of a short-term Adam & Eve double-top structure.

• The first, sharper Adam-style top came on June 3rd. The second, broader potential Eve-style top has been forming across the four-day stretch from June 15th to June 18th.

• This pattern is not confirmed yet, and we do not want to treat it as a fully bearish reversal while QQQ is still holding above its key higher-timeframe support.

• The most important support remains the rising 10-week EMA / 50-day moving average zone near $690, where QQQ bounced aggressively on June 9th.

• That bounce was real, but the follow-through has become increasingly choppy. Given the current churn, the extension from the weekly structure, and the weakness beneath the surface in mega-cap leadership, the double-top risk remains a valid short-term scenario.

• On the weekly chart, QQQ is still extended, but relative strength remains present. That keeps the broader structure from being outright bearish, even if the short-term price action is becoming much harder to trust.

• The bigger issue is the MAGS / Magnificent 7 basket.

• Since the June 1st area, MAGS has been hit extremely hard, with a major spike in relative volume over the last three weeks. That tells us the weakness has not been quiet or passive.

• MAGS is now trading below its 10-week moving average, though it is still holding above the 20-week EMA at $65.23.

• That 20-week EMA is now the key line. If MAGS loses that level, it becomes much harder for QQQ and SPY to hold their broader structures, simply because the Magnificent 7 still represent roughly 30–40% of QQQ’s weight.

• Relative strength in MAGS has also deteriorated, now sitting around 60 versus the SPX. That is a major change from the earlier part of the year, when mega-cap tech was doing most of the lifting.

• That is why we are not looking to chase Nasdaq strength here. Pullback longs can still make sense at proper support, but buying marginal highs in QQQ is much lower quality while the MAGS basket is below the 10-week moving average and losing relative strength.

S&P 400 Midcap

58.64%: over 20 EMA | 59.39%: over 50 EMA | 60.90%: over 200 EMA

• MDY remains one of the more important areas to watch because it was previously one of the cleanest leading segments of the market.

• Last week’s action changed the tone slightly. We saw a high relative-volume reversal, combined with an elevated average true range expansion, meaning the move was not just a low-volume shakeout. It had both volume and range behind it.

• That matters because high-volume, high-range reversals often signal real churn. They do not automatically mean the trend is over, but they do tell us supply has started to appear.

• MDY is still extended above its 10-week moving average, though not aggressively so. Price is roughly 3.24% above the 10-week EMA, which is manageable, but not an ideal fresh-entry location.

• Relative strength is also starting to soften, now around 72 versus the SPX.

• That is worth monitoring because MDY had been one of our preferred leadership reads. If relative strength keeps breaking down, it would confirm that leadership is becoming less clean across the mid-cap space.

• The current read is not bearish, but it is clearly choppy. A bounce may be forming, but there is enough evidence of churn that we should avoid treating every push higher as a clean continuation signal.

Russell 2000

62.63%: over 20 EMA | 61.04%: over 50 EMA | 61.62%: over 200 EMA

• IWM currently has the strongest relative strength reading among the main index cohorts, sitting at 87 versus the SPX.

• That is important because small caps are continuing to act better than many traders would expect in a choppy tape.

• IWM also had the cleanest recent pullback structure, moving more linearly into the 10-day moving average near $290 before bouncing aggressively during Thursday’s session.

• That bounce came on 117% relative volume, which confirms there was real demand at the short-term support zone.

• From a capitalization-segment perspective, small caps currently look like the strongest area, but that does not mean we should buy indiscriminately.

• Sector selection is critical. In this tape, small-cap strength is not broad enough to justify buying the whole market blindly. We need to stay focused on the pockets where demand is actually showing up.

• The most important takeaway remains that buys on weakness are working better than buys on strength.

• Pullback entries into support are being rewarded. Chasing extended moves into marginal highs is much lower quality and far more likely to get caught in the current churn.

FOCUSED STOCK
TSLA: A Very Strong Long On Weakness

ADR%: 3.90% | Off 52-week high: -19.7% | Above 52-week low: +38.7%

• Tesla may seem counterintuitive because it is part of the MAGS complex, and that group has been under real pressure. But the distinction is important: we are not looking at Tesla as a breakout chase. We are looking at it as a pullback-long candidate into higher-timeframe support.

• Tesla is currently holding its 15-week moving average at $389.24.

• The stock has bounced from that area for three consecutive weeks, which makes the level increasingly important.

• That same area also aligns with the 10-month moving average on the monthly chart, meaning Tesla is sitting on both an intermediate-term and primary-chart support zone.

• That higher-timeframe confluence is the main reason the setup is interesting.

• With earnings approaching in the next few weeks, there is a realistic possibility that Tesla attempts to build a bounce from this support zone back toward the weekly point of control around $440.

• The setup is not without risk. Tesla is still part of a weakening mega-cap basket, and MAGS relative strength has been deteriorating.

• But from a pure risk/reward perspective, Tesla is one of the cleaner MAGS names because the trade can be structured against a nearby higher-timeframe support level rather than chasing strength after a breakout.

FOCUSED GROUP
XBI: Biotechs & Pharma Are Leading

• Our focus groups remain biotech and pharmaceuticals, specifically XBI and XPH.

• This is where the healthcare complex is showing its real leadership.

• XLV, the broad healthcare ETF, is not acting particularly well on its own. But underneath the surface, biotech and pharma are clearly the strongest segments within healthcare.

• XBI and XPH are both breaking out on high relative volume, which is exactly what we want to see from leadership groups in a choppy market.

• The expansion is also very linear, which matters. These groups are not just bouncing randomly from oversold levels; they are trending higher with clean demand and improving structure.

• This is where capital appears to be rotating.

• In the current tape, we want to focus on groups that are showing:

  • High relative-volume breakouts

  • Clean trend expansion

  • Improving relative strength

  • Leadership independent of mega-cap tech

  • Stronger structure than the broad market

• XBI and XPH fit that profile better than most areas right now.