MARKET ANALYSIS
Here’s All You Need To Know

• The market starts the week with a more complicated macro setup than Friday’s close suggested and the main story right now is oil. Crude is higher again after the U.S. and Iran agreed to pause hostilities and allow commercial vessels to move through the Strait of Hormuz, but the weekend showed how fragile this situation still is. WTI is back around the $70 area after settling below that level on Friday for the first time since before the Iran war began, while Brent is trading around $73.

• That move is not a major oil shock yet. But it is enough to remind the market that the Iran risk premium has not disappeared. The U.S. struck Iranian missile, drone and coastal radar sites over the weekend after a tanker was reportedly hit in the Strait of Hormuz. Iran’s neighbours, including Kuwait and Bahrain, also reported missile and drone activity. So while both sides are now saying they will stand down for the moment, the broader message is clear: the ceasefire exists, but it is not stable.

• This matters because the market had started to price a much cleaner supply recovery. Oil fell aggressively last week as traders looked through the Middle East headlines and focused on tanker traffic reopening through Hormuz. That helped ease inflation fears, supported yields moving lower, and gave equities room to stabilise after the tech-led selloff. Now that assumption is being tested.

• The risk is not that oil is back at crisis levels. It is not. The risk is that the market may have become too relaxed about the speed and durability of the supply normalisation. ING made the same point this morning, arguing that energy markets appear too optimistic about the recovery timeline in Persian Gulf flows. That is the right framing. Oil is still well below the panic highs, but the upside tail risk has returned.

• For equities, that creates a more difficult setup. Last week, the market was already dealing with AI funding stress, semiconductor volatility, a fragile Nasdaq and a Fed that remains focused on inflation. If oil starts rising again because the ceasefire looks unstable, it reintroduces the same inflation problem just as the market heads into a jobs-heavy week.

• The June payrolls report is due Thursday, with U.S. markets closed Friday for Independence Day. Payrolls rose 172,000 in May, and economists are looking for around 135,000 jobs in June. A strong labour-market print would normally be supportive, but in this market it may not be treated that way. If jobs are too strong, investors will likely interpret it as confirmation that the economy is still too hot and that the Fed has room to keep policy tight or even hike again.

• That is very different from the setup earlier this year, when investors were still hoping for rate cuts by year-end. The market has now moved toward pricing a higher probability of a Fed hike by September. That shift matters because it changes how good economic data is interpreted. Strong growth is no longer automatically bullish if it keeps inflation pressure alive and gives the Fed cover to stay hawkish.

• This is why oil matters so much. Lower oil helps bring headline inflation down. Higher or unstable oil keeps the Fed boxed in. Even if the labour market cools slightly, a renewed energy premium would make it harder for the market to fully price a dovish turn.

• China is the other important macro input today, and the read is more supportive for global growth.

• China’s economy appears to have picked up in June after losing momentum in April and May. The China Beige Book survey showed improvement in manufacturing and retail sales, with U.S.-bound orders rising sharply year over year. That suggests the external sector is doing a lot of the heavy lifting, helped by U.S. importers frontloading shipments ahead of possible tariff changes, fuel surcharges and supplier price increases.

• Freight rates between Asia and the U.S. have climbed to the highest level in nearly two years, which confirms that trade activity has strengthened. But the quality of that improvement still needs to be treated carefully. If the rebound is mostly frontloading ahead of tariffs, then it may not represent durable end-demand. It could pull growth forward into June and July before activity fades later in the summer.

• Goldman Sachs raised its third-quarter China GDP forecast to 5% from 4.5% quarter-on-quarter annualised, citing faster fiscal spending and lower oil prices. That is constructive for global cyclicals, commodities and industrial demand, but again, it depends on oil staying contained and trade conditions not deteriorating.

• So the global read is mixed. China is improving. Oil supply risk is still unstable. U.S. jobs data could either calm or reprice Fed expectations. And the market is still trying to work out whether last week’s AI and semiconductor volatility was a reset or the start of a deeper leadership unwind.

• For traders, this is a week to be very aware of headline risk. A renewed move higher in oil would pressure inflation expectations. A hot jobs number would raise rate-hike risk. A weak jobs number could support bonds and growth stocks, but it would also raise questions about the underlying economy. That means the reaction function is not simple.

Nasdaq

47.52%: over 20 EMA | 49.50%: over 50 EMA | 59.40%: over 200 EMA

• QQQ remains inside the Adam & Eve double-top structure, and the neckline is still the key battleground.

• For three straight sessions, since Wednesday of last week, QQQ has effectively held the rising 10-week moving average around $700. That level matters because it is not just a moving average test. It is also the area where the double-top neckline, the weekly trend support, and the recent volume profile support all start to overlap.

• Last week’s downside push was meaningful. QQQ traded on 112% relative volume across the weekly range, and the range itself exceeded one full average weekly range. We were expecting roughly 4.53% of weekly movement, but the ETF ended up moving closer to 6%. That confirms that the move lower was not normal digestion. It was a high-participation downside expansion into a major support zone.

• We do expect a bounce attempt this morning, but the overhead supply is still the problem.

• Just above current price, around the $709.92 area, the visible range volume profile shows roughly 10M shares traded red versus about 6M shares traded green. That is a clear seller imbalance. Supply then continues higher toward roughly $736.68, meaning any push into that zone is unlikely to be smooth. There are trapped buyers and sellers waiting above, and that makes the early bounce vulnerable to fading.

• The bigger swing factor remains the Magnificent 7. They are the group that would need to lead any real Nasdaq bounce. The MAGS have pulled back into the 50-week moving average, and for now that level appears to be holding. That is constructive enough to prevent us from calling for a full breakdown immediately.

• But the individual behaviour inside the group is still concerning. Nvidia, Tesla, Google and other large weights continue to show downside expansion and damaged structure. With oil also starting to push higher again after the weekend Iran headlines, the macro backdrop is not giving growth stocks a clean tailwind.

• Our view is that this is still more likely a profit-taking phase than the start of a much deeper structural bear leg. But that does not mean we want to chase the first bounce.

• The cleaner long setup would come closer to the 50-day EMA around $697 and the 10-week EMA support zone on QQQ. If buyers defend that area again with strong intraday demand, then pullback-long exposure becomes much more interesting.

S&P 400 Midcap

66.16%: over 20 EMA | 67.66%: over 50 EMA | 66.66%: over 200 EMA

• The mid-cap complex continues to support the idea that the broader market has not fully broken.

• MDY pulled back into the rising 10-day moving average around $690 and found clear demand. At that level, the visible range volume profile showed roughly 147,000 shares traded green versus about 104,000 shares traded red. That is a meaningful buyer imbalance and suggests institutions are still willing to support the group on weakness.

• The test also came on statistically high participation, with relative volume around 181% of the 20-day average. That is important because it shows the support reaction was not passive. Buyers actively stepped in at the moving average.

• The issue is overhead supply. Above $696 and into the $700 area, seller aggression increases sharply. We are seeing roughly a 2.2x increase in seller aggression as price pushes into that zone. That supply stretches all the way toward the recent highs, making fresh breakout exposure unattractive.

• So the MDY read remains the same: this is still a pullback-long market, not a chase-the-breakout market.

• For the last two months, nearly every push toward the 20-day moving average has coincided with the next leg higher. The structure has been a grinding Stage 2 advance, but not a clean linear expansion. The one concern is the weekly behaviour.

• Over the last five weeks, relative volume has been rising, but price has not made a material upside move. That suggests distribution is still appearing near highs.

Russell 2000

71.29%: over 20 EMA | 68.32%: over 50 EMA | 65.99%: over 200 EMA

• Small caps are still the strongest expression of risk appetite in the index complex.

• IWM performed well on Friday, expanding on 141% relative volume and testing the rising 10-day moving average before pushing immediately higher. That is constructive. More importantly, the visible range volume profile shows roughly a 2-to-1 buyer imbalance between $295 and $298.70. That is exactly the kind of demand response we want to see if small caps are going to keep leading.

• The relative strength profile also supports the read. IWM currently has the highest relative strength rating against the SPX, around 82, which makes it one of the clearest signals that risk appetite has not disappeared from the market.

• That matters because if investors were moving into pure de-risking mode, small caps would usually struggle quickly. Instead, they are still attracting demand on pullbacks.

• IWM is still choppy, and it has already moved well off the lows. The better trade is not chasing strength into the highs. It is watching whether the ETF can continue to hold the $295-$298.70 demand zone and then build from there.

FOCUSED GROUP
XLV: Still The Place To Be Holding Longs

• Healthcare remains the main sector we are tracking for rotation exposure.

• XLV had an extremely strong session on Friday, trading on 162% relative volume. The weekly structure was even more important, with relative volume expanding to 121% of the 20-week average while the weekly range reached roughly 8%.

• That is more than 2.2x the expected average weekly range, which tells us this was a genuine institutional rotation move, not a marginal defensive bounce.

• XBI and XPH are confirming the move, with both biotech and pharmaceuticals pushing higher in tandem. That matters because the strength is not isolated to one pocket of healthcare. The broader healthcare complex is participating.

• The problem now is extension. XLV is becoming too extended for marginal high exposure. The ETF is around 5.18 ATR percentage multiple from the 50 EMA, which means the near-term risk/reward is no longer attractive for chasing. At this stage, mean reversion setups make far more sense than breakout exposure.

• The ideal scenario would be a pullback toward the weekly point of control around $152.81. That would give us a cleaner entry zone inside the strongest sector currently rotating into leadership.

• This is still the sector we want to rotate exposure toward, but the entry has to be disciplined. Healthcare is strong, but strength alone is not enough after a range expansion of this size.