Weekly Benchmarks
Weekly Factors vs. S&P 500
Weekly Performance
<aside> <img src="/icons/light-bulb_gray.svg" alt="/icons/light-bulb_gray.svg" width="40px" /> Markets stand at a pivotal inflection point characterized by a striking contrast between resilient technical indicators and substantial fundamental headwinds. The S&P 500's impressive recovery from April's "Liberation Day" tariff-induced selloff culminated with the index erasing nearly all its losses, despite ending the week slightly lower (-0.7%). This recovery was fueled by President Trump's UK trade deal announcement and hints at potential China tariff reductions ahead of weekend negotiations. Multiple technical indicators suggest a sustainable market bottom: the Zweig breadth thrust maintained values above 58% for eight consecutive sessions, the market executed a classic V-shaped recovery retracing more than 50% of the decline within 18 sessions, and the TCTM thrust model triggered after a 9% surge over ten trading sessions. Historical analysis suggests these patterns typically precede positive returns over 6-12 month horizons with win rates exceeding 80-90%. Oil markets provided important verification of improving sentiment, with WTI climbing to $61 per barrel for a 4% weekly gain, signaling recalibration of growth expectations based on potential trade policy moderation. Realized volatility has reset sharply lower, creating conditions for systematic strategies to add significant exposure, with Nomura estimating approximately $25 billion in forthcoming buying from volatility control strategies alongside substantial corporate buybacks ($240 billion in April alone). Near-term technical focus remains on the 5721.75 level (exceptional call volume), 5738 (CTA short-covering level), and 5750 (200-day moving average), while valuation metrics show the S&P 500 trading at an elevated forward P/E of 20.9x.
Despite this technical strength, fundamental concerns create an asymmetric risk profile. The IMF forecasts the US facing a -0.9 percentage point growth revision due to tariffs, while productivity decreased 0.8% in Q1 as unit labor costs surged 5.7%, creating stagflationary pressures. Consumer inflation expectations remain stubbornly high at 3.6% for the one-year horizon, constraining Fed policy flexibility. A troubling divergence exists between the Atlanta Fed's GDPNow model showing 2.3% growth and Blue Chip forecaster consensus near zero—highlighting the tension between current data strength and anticipated weakness.
Federal Reserve policy remains a critical uncertainty, with Powell emphasizing "uncertainty" and acknowledging tariffs are "a lot higher than the Fed anticipated." Markets still expect three rate cuts in 2025, with the first now most likely in July (57% probability) and September increasingly likely for a second reduction. However, elevated inflation expectations may constrain Fed flexibility as unit labor costs accelerate.
The positioning landscape reveals extraordinary dynamics explaining the disconnect between price action and fundamentals. CTAs remain net short despite the rally, while fund investors sold into strength. This professional skepticism contrasts dramatically with retail enthusiasm, as Bank of America data revealed an unprecedented 21-week retail buying streak with private clients purchasing a record $2 billion of equities over just four weeks, while institutions dumped ~$2.7 billion—creating a Main Street versus Wall Street divide larger than during the 2022 bear market.
The left tail risk centers on a "stagflationary trap" where tariff-induced inflation constrains the Fed's ability to address growth concerns, with corporate exposure to China ($1.167 trillion in revenue) representing a critical vulnerability. The right tail opportunity emerges from potential diplomatic progress at the weekend's US-China meeting, with Trump suggesting tariffs could be reduced from 145% to 80% depending on negotiation results.
Looking ahead to Week 20, the weekend's US-China meeting represents the central event, with Monday's market reaction providing the first verdict on diplomatic outcomes. Tuesday's CPI report takes on heightened significance given tariff-induced inflation risks, while Wednesday's retail sales will reveal consumer resilience. Corporate earnings from Alibaba, Walmart, and other major firms will provide further insights. Seasonal analysis suggests focusing on healthcare (favorable through July 31) while showing caution toward copper miners, homebuilders, Japanese stocks, and transportation sectors, which are entering historically unfavorable periods.
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Calendar (UTC-4)
Macro Dashboard
Cross-Asset Volatility — CBOE
Cross-Asset Correlation — CBOE
Higher TF (W → D) NEUTRAL - The ES recovery emerged from the massive 5528.75 → 5127.25 bull flag, generating a 600-handle rally that reached (and now twice tested) the 5729 midpoint of the 5930 MM target (+4.44%) — see Chart 2 above. While the V-shaped structure is clear, the key question remains: is this a major trend reversal or a breakout pullback of the December lows? V-reversals typically face retests while V-pullbacks don't—and last week's price action suggests a possible final flag and double-top formation despite a modestly higher WHI. Meanwhile, the countertrend structure maintains supportive above the April VAH 5560 (-2.06%).
Lower TF (3H → M30) BULLISH - Our near-term consolidation scenario was confirmed by a breakout pullback that retested the prior week's pullback low at ~5600 (-1.37%). The key question ahead is whether this pullback confirms a final bull flag followed by a double-top buying climax compared to last week's high—suggesting near-term exhaustion at coincidental higher timeframe resistance levels. The lower timeframe bullish path remains valid while price holds above 5660. However, a break below the 5660 triple-bottom support would trigger a bearish path targeting the 5593 MM near the 50-day moving average (-1.53%).
ATM IV30 18.79% v HV 41.49% IV-HV -22.70%
<aside> <img src="/icons/arrow-up_blue.svg" alt="/icons/arrow-up_blue.svg" width="40px" /> Bulls will seek to breakout above 5724.75 and ideally establish price acceptance above WHI 5741 on a closing basis. Upside: 50% MM 5784.75 and 5800 are within +1σ (W) 5827.00 (+2.62%).
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<aside> <img src="/icons/arrow-down_red.svg" alt="/icons/arrow-down_red.svg" width="40px" /> Bears will seek breakout below the 5662.50 triple-bottom and ideally Thursday’s pullback low 5653 on a closing basis. Downside: < 5591 50d MA (-1.53%) is well within the **-1σ (W) 5536.00 (-2.50%).
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Last Week: 5678.00 JUN25 -0.44% DTE 40.95
<aside> <img src="/icons/arrow-up_blue.svg" alt="/icons/arrow-up_blue.svg" width="40px" /> Bulls will seek to establish range extension above the WHI and ideally 5800 on a closing basis. Upside: W10 Naked WVPOC 5773 and DEC LO 5849.50 are within +1σ (W) 5865.00 (+2.46%).
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<aside> <img src="/icons/arrow-down_red.svg" alt="/icons/arrow-down_red.svg" width="40px" /> Bears will seek to offer back below the 50d MA 5627.50 on a closing basis. Downside: < 5600 (-1.91%) is within, and Mar 13th gap close is coincidental with -1σ (W) 5561.50 (-2.58%).
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