Jobs Cool, Chips Crack
The S&P closed up 1.12% from Monday’s open, marking substantial structural progress, finishing the week above the June 23rd gap.
This is impressive considering that markets started to show some cracks into the end of the week, especially across AI, memory, and semiconductor names.
Meta is having all sorts of issues with AI and as a result Micron and Sandisk lost their 20-day SMA. As a result the NASDAQ started to diverge from the S&P pretty meaningfully.
That doesn’t mean the market is falling apart. The bigger question is whether this is a healthy rotation under the surface or the start of broader selling pressure.
Rotation Rotation Rotation
The Dow closed at a record high while the Nasdaq finished lower on the week…
We’re seeing two stories be completely repriced in the last week or so.
First we have Meta, who reportedly wants to sell excess AI computing capacity through a new cloud business. At face value we think, “great, another revenue stream.” On second thought though we think, “Did they overbuild? Is this CapEx for nothing?!”
This matters for all of the semis, memory names, neoclouds… just about anything trading at a premium due to the AI boom.
Meta additionally mentioned not seeing the amount of progress they were hoping for when it came to the development of agentic AI. Yet another blow to the markets pricing in AI perfectly.
AI will no doubt change the world, it already has. But markets have been pricing in absolute perfection with no speed bumps along the way. Thats not the reality.
Second is oil. OPEC+ agreed to raise the August output by 188k barrels per day, with the Hormuz pressure continuing to fade as well.
The question here becomes does lower oil support airlines, transports, consumers and the disinflation argument? If so, the market may become more optimistic about rate cuts instead of hikes.
This weeks earnings calendar brings us Pepsi Co and Delta Airlines… we’ll see where the numbers land. More importantly, scan the conference call transcripts for any mention of lower input costs, or easing of fuel shocks.
Jobs Cool, But The Fed Hasn’t Blinked…
June payrolls came in at just 57k, just half of the 114k expectation. The May labor report was revised down substantially, from 172k to 129k. The unemployment rate fell to 4.2% and hourly earnings were normal at 0.3%.
This was a “fine” report that suggests immediate rate hike pressure is likely unwarranted, and the Fed should have room to stay put.
This is what we would have expected under Powell, but its hard to read Warsh.
Markets have unpriced some of the hike odds as of Thursday’s close, but we can still see May, April, June 2027 odds are teeter tottering by just a few percent.
The next few data points matter most for cementing the short term path. FOMC minutes come out on Wednesday at 2:00p and we’ll see if we get any more color on how the Fed is thinking about the labor vs inflation problem.
Beyond that its CPI coming out in two weeks that may issue the final blow.
The Bottom Line
This weeks focus is on rotation. And rotation tells us about how the market is thinking about the Fed.
If leadership in AI resumes and the risk off sectors remain sideways, markets are looking past Meta’s overbuild and are more optimistic about lower rates in the future.
If leadership in AI does not resume, markets will be incredibly sensitive to the downside should lighter weight defensive sectors pull back. This gets us closer to thinking the market is fearful of the two rate hikes the Fed threatened in the last FOMC.
As a helping hand, let the RSP equal weight S&P 500 ETF light the way. For now the rally is broad enough outside of the heavy weight AI companies to close at a new all time high.
As always, we’ll let the charts light the way, so lets jump in.
Trade Brigade Live Squawk
Don’t let the chop get you. Know when to rotate! 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: 06/24/2026 Live Squawk
Broad Market Analysis
SPY – Monthly
The June monthly bar closed as a red-bodied hammer, which suggests buyers stepped up near the monthly range lows and pushed price back into the upper third of the range. It is technically a red body, but the location is still constructive: mostly equal highs, mostly equal lows, an inside bar, and a bullish three bar play at the monthly highest high.
The big-picture monthly trend is still up. A pullback can still be a higher low, with the ideal retest area near the prior all-time high around 700. If the market breaks out instead, the next reasonable extension target from the monthly bull flag work is around 850, not necessarily immediately, but as a logical slowdown zone if continuation develops.
SPY – Weekly
The weekly chart still looks like high tight consolidation. The weekly candle was a solid green-bodied bar with some upper wick, but buyers still went two for two on structure and location. Price held above the fib 38.2, stayed above the weekly 20 SMA, and closed over the all-time high anchored VWAP.
SPY – Daily
The daily chart made meaningful improvements into the end of the week. Sellers had several chances early on to take control by losing the 50 SMA, or building a lower high under 739.65 failing the gap, or even close the gap all the way to 743.5 and then offer gap fill reversal. Sellers could not get the job done. Thursday’s support came right near the gap closure area and the daily 20 SMA.
SPY – Hourly
The hourly chart is where the gap structure cleans everything up. Previous resistance has become newfound support, and as long as that holds, the market has the ingredients for an hourly higher low that can turn into a daily higher low. The intraday anchored VWAP stack was also reclaimed. This is the 739.65 level.
If that level fails, the hourly trend is no longer up and we have to get back into the mindset of daily balance, and short term downside pressure. This can set off selling on catalysts, but should be more resilient vs the Nasdaq due to sector rotation.
Market Internals – NYSE
The NYSE internals did not show sellers taking control. Even on the Thursday pullback, volume flows into the close were strong, the advance-decline line faded toward zero but did not get close to trend lower zone, and the index score was more flat than bearish.
The cumulative build finished around -1,250, which is not even halfway to the roughly -5,000 threshold I usually look for as a substantial bearish impression. That supports my slightly bullish bias in the S&P as long as price remains above 739.65.
Market Profile – /ES
The /ES profile was one of the more bearish charts in the review because value shifted lower on Thursday. Value had been moving higher, price traded higher early, but value could not sustain that elevated position and instead overlapped to down.
That said, this is not the end of the world. If /ES opens above value area high, there is bullish buffer, and pullbacks above roughly 7550 can set up for a move back toward Thursday’s high and potential continuation. If 7550 is lost, bears have more to lean on, and underneath Thursday’s low the setup gets more dangerous.
QQQ – Impact on S&P
QQQ is the weaker index product, with the AI and tech side of the market is under more pressure than the S&P.
The key QQQ level is 722. If QQQ reclaims 722, the range can keep compressing and the market can stay balanced. If QQQ rejects under 722 and breaks 707, the door opens toward 699-700, then possibly 675, with 664.50 as the deeper structured breakdown level.
Keep it simple: if I want shorts, I would rather pick on QQQ. If I want longs, I would rather lean toward the S&P because it has financials and healthcare helping absorb the damage.
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
- ISM Services PMI – Should have a prices paid breakout component which will address the Feds concern that services inflation is still running too hot.
Top watches: PENG, PEP, DAL
Swing Stock Scans
FAF – Daily Chart
Flat base breakout available over the 71.4 level. Great inside bar from the Thursday session curling over the moving average stack.
FTNT – Daily Chart
Miss the first breakout day on 6/25? Well, you’ve got another inside bar setup after breaking the flag and setting a higher low.
GEV – Daily Chart
Not sure if this is totally ready yet, but watching for higher lows to keep this in play and build out more right hand side of the base.
HXL – Daily Chart
Tight bars starting to form under the breakout level at 101.5. Nice series of higher lows and over the entirety of the moving average stack.
LTH – Daily Chart
Strong move higher over the last two months. Nice flag forming with inside bar. Can cheat the setup and get involved over Thursday’s high rather than waiting for this to get wide and loose through the breakout point at 41.8.
MRK – Daily Chart
First flag setting up over the top of the flat base. Ideally has one tight day under 130 and then goes, but watching for this over the highs, and to stay in play higher lows over the 124 area.
VIRT – Daily Chart
Clean uptrend with higher lows in place and a tight inside day Thursday. Looking for a breakout over the inside day high to push over the range high and into blue sky territory.