The Fed Is TRAPPED…
The S&P has continued to extend its loss under the balance range down another 2.99% last week from Monday’s open to Friday’s close.
Price has now officially closed below the daily 200 SMA (green) as well.
Notably, the market also overshot the prior equal low set from October and November 2025. More on this later.
The Fed’s Dilemma
On Wednesday, the Fed did exactly what everyone expected. Hold rates at 3.50–3.75%, voted 11-1 with Super Dove Miran as the outlier, and change nothing.
But it wasn’t really “nothing.” In the updated SEP document, the Fed raised the inflation forecast from 2.4% up to 2.7%.
The market saw that, paired with $96 crude, two consecutive hot PPI prints (February came in hot at +0.7% that same morning) and a 10-year yield that immediately jumped to 4.2%, did the math and decided:
“Actually, you get zero cuts.”
Remember this is down from the two cuts that the market was pricing in at the start of the year.
There was even discussion around rate hikes in the FOMC meeting, although Powell tried to dampen that statement by saying, “The vast majority of participants don’t see that as their base case.”
The bottom line is that anything sensitive to interest rates took a beating into the end of the week as rate expectations were repriced.
Expect More Oil Volatility
Trump issued Iran a 48 hour ultimatum this weekend to fully reopen the Strait of Hormuz or face US strikes on Iranian power infrastructure. Tehran responded by threatening Gulf energy and desalination assets if those strikes materialize.
The point being this week, is expect movement on crude. If you haven’t had /CL or /BZ up on your screens as you’re trading recently, you’re flying blind.
Of course, this continues to put pressure on the Fed as well the longer crude remains at higher prices.
In the press conference Powell made it very clear that the Fed has no idea how this all shakes out, and isn’t really interested in speculating about it either. Instead they’ll take it meeting by meeting.
Markets as we’ve noted have already made the interpretation for the Fed… its hawkish.
AI Is Fine… Markets Just Don’t Care
The AI story didn’t break through all of this. At GTC, Jensen said Nidia sees more than $1T of revenue through 2027 tied to Blackwell and Rubin AI chips. That was a great headline, but the market was already pricing this as revenue expectations, hence the tape faded.
Micron backed up the positivity on Wednesday after hours with a strong beat and raise, but the stock price reaction was still weak.
Just more data that the market is hyper fixated on the inflation and crude situation right now, not the AI narrative.
The Plumbing Is Changing
While markets are hyper focused on Powell, Oil, Hormuz… something quiet happened in the background.
On March 18th the SEC approved the Nasdaq’s proposal to let certain securities trade in tokenized form, with the initial universe including Russell 1000 stocks and select index ETFs tied to benchmarks. Think S&P and Nasdaq.
That does not mean Wall Street is fully on-chain tomorrow. But it does mean we should start paying closer attention. The world of 24/7 trading and instant settlement is perhaps closer than we think.
Suddenly names like CRCL, FIGR have some serious reasons to be catching a bid. Certainly worth watching COIN, NDAQ, ICE, HOOD, BULL, and even MA and V as well.
FIGR traded the highest weekly volume ever since listing as it took out its IPO price two weeks ago. Someone knows something!
Trade Brigade Live Squawk
Markets finally broke. Do you know when to short? Join the intraday squawk to trade with a plan, not emotion.
Check out this recording for a taste of what each morning session is like: 07/09 Live Squawk
Broad Market Analysis
SPY – Weekly
Solid red body with heavy close in the lower third of range. Lower high, lower low. Candle opened inside the prior week’s range and closed completely outside and below it. Sellers take bar by bar analysis here.
The trend has officially flipped down. This is a major lower low on the weekly. That means any rally from here, even a multi week rally, is best treated as a lower high in progress until price proves otherwise.
The line in the sand is 675. The weekly 20 SMA is drifting down toward it. The 61.8% Fibonacci from the ATH to last week’s low is confluence. Reclaiming 675 on a close would force a reassessment. Anything below it is still a downtrend setting a lower high.
High timeframe buy opportunity on the monthly higher low thesis (MoHL) in the neighborhood of 615-612 still stands.
SPY – Daily
Weekly expected move suggests a lower high relative to Tuesday and a lower low. If price stays contained, trend remains down on both sides.
Clean break under the 200 SMA on Thursday’s gap fill reversal and Friday’s follow through. Note also the overshoot of prior left side support at 653 area.
In terms of pathing, three scenarios, same outcome.
- Counter-trend path: Rally sets daily lower high near 662.50, then back down.
- Bear flag path: No reclaim of 653, continuation directly toward 634.
- Gap-down path: Flush into 634 rubber-band trade, counter-trend, still resolves as a lower high.
Every path ends at a lower high. None resolve bullish until the trend count says otherwise.
SPY – Hourly
Price failed on Tuesday to remain over the inverted head and shoulders neckline. That was the last chance buyers had to stay within striking distance from the bottom of the major overhead range. Thursday gap fill reversal is a clear display of stronger sellers and weaker buyers participating.
Fractal requirement for a daily lower high: hourly trend must flip up first. That means hourly higher lows building above 653. Once that condition is met, 662.50 becomes the area to watch for the lower high and the next short setup. From there, continuation targets the 634 area.
Market Internals – NYSE
No hidden divergence anywhere at the exchange level. Internals are confirming the break, not contradicting it. The one note is that this level of sustained weakness does not last forever and sets the stage for a counter trend snapback. That snapback still resolves as a lower high as noted above.
Market Profile
J period printed single prints during the late day liquidation break on Friday. After hours, price rallied back to reclaim the single print divider. Point of control sits above the single print zone. Value area is mostly in the upper distribution. All of these are minor concessions to the bulls.
Value still migrated lower every session. Thursday and Friday value areas sit beneath the lows from earlier in the week.
QQQ
QQQ undercut its prior lows of 580.75 intraday Friday but did not close below. SPY closed clearly beneath its equal lows.
If the macro backdrop improves, Qs are the better vehicle for any long thesis. Just something to have in the back pocket… Remember the base case is lower highs on every counter trend pops. Key level for bears to defend is 595.
Volatility Futures Term Structure
The volatility curve is still in deep backwardation, with the front month contract well above the back month. Money managers do not allocate capital into an inverted curve.
When that curve re-inverts, it will be a significant signal. That is the one indicator I will be watching closely if the market attempts a turn.
If you want the full take, including all of the nuance of breadth, risk appetite and much, much more, check out the weekend episode here:
Economic & Earnings Calendar
S&P Global PMI – Top watch to see if we are getting any inflationary impulse out of prices paid. May also alleviate some growth concerns.
Top watches: ONDS, PDD, KRMN, PONY, CCL, TMC
Swing Stock Scans
Let me start by saying with the official range low break in the S&P 500, swing trading long only will become increasingly difficult. Scans will become few and far between unless we have a massive failure pattern on the weekly.
FORM – Daily
Possible low cheat setup in a semiconductor name. Market conditions are ROUGH for this to be an A+ opportunity, but it did have some relative strength on Friday.
OII – Daily
Similar low cheat setup, but this is at least in an oil and gas name. A bit more aligned with the overall environment.
SEI – Daily
Multi month base breaking out. Looking for a daily higher low setup over the top of the range at 59.65 or on the gap fill at 56.40 area.
YOU – Daily
This has been on the market leader list for the last few weeks since the earnings gap and go. Tightening up with a higher low over the 20 SMA and looking like a potential flag break.