Records On A Memo Nobody Signed.

Well folks, we hit Friday up but still sluggish. This “markets only go up” run, while frustrating, will eventually come to an end. I don’t believe – based on some new research on crashes and corrections – that we’ll see a complete market collapse. But a consolidation wouldn’t be unrealistic.

On a personal note, I would like to see a corrective move 5-10% simply because the market needs to reset itself. The price behavior on most of the time frames is horrendous. Very scrappy.

The bad news – frustrating to live and trade through in real time. The good news – all these things are cyclical. It’s not the first time and won’t be the last. Which makes it important to trade small and keep consistent to the system and the process.

SPX swings flipped bullish and back to bearish just as quick. I’ve kept my bear swing and will likely roll it today if we don’t get a down move today. I’m just being lazy here more than anything, as I was out most of yesterday. Thankfully an easy fix to roll and still come out on top.

RUT is still in avoid mode due to the MACD-v reading – so the system updates are doing their job well here. We are also gliding into a BBW pinch / range so waiting for the breakout makes sense. Monday is soon enough for a new trade here, and we should be out of the MACD-v extreme danger zone by then.

BTC continues its down move. We are now in breakout mode and looking for a push to 70.5k as the breakout target.

Other points of interest are that we are sitting on the last Friday of the month, which can be a little scrappy.

Market Briefing:

Friday 29 May – last Friday of the month, scrappy by reputation. PCE 3.8% the highest since May 2023.

• Thursday closed records: SPX 7,563.63 +0.58% / Nasdaq 26,917.47 +0.91% / eighth winning week in nine

• The cited cause: a tentative 60-day memorandum to reopen the Strait of Hormuz / the memo unsigned / it landed hours after fresh US-Iran strikes

• April PCE 3.8% – the highest since May 2023 / rate cuts long promised quietly became rate hikes / Kevin Warsh gets the invoice in mid-June

• Software led, semiconductors stayed home / Snowflake +36.5% (best session on record) for guiding higher / Salesforce -2% for posting respectable

• Premarket snap: ES +0.65% / NQ +0.10% / YM +0.20% / RTY +0.13% / VIX 15.85 / BTC -1.15% to 73,744

• Last Friday of the month – month-end positioning in play

Market Snapshot

• ES: 7,591.25 / +48.50 (+0.65%) / NATHs 7,595.25 / ticks from a fresh print

• YM: 50,857 / +99 (+0.20%) / NATHs 51,209 / Uncle Dow easing higher

• NQ: 30,343.75 / +30.75 (+0.10%) / NATHs 30,379 / Nazquack barely budging

• RTY: 2,939.90 / +3.70 (+0.13%) / NATHs 2,952.00 / Uncle Russ in the same range

• GC: 4,558.70 / +31.40 (+0.69%) / actual gold bid back

• CL: 87.29 / -1.24 (-1.40%) / oil softer on the memo

• VIX: 15.85 / +0.12 (+0.76%) / at peace with a peace that isn’t signed

• BTC: 73,743.98 / +231.42 (+0.31%) / down move continues per the larger picture

Tag ‘n Turn

SPX swings flipped bullish and back to bearish just as quick – bear swing kept and likely rolling today. RUT still in avoid mode due to the MACD-v reading, gliding into a BBW pinch. BTC in breakout mode targeting 70.5k.

Three different decisions on three different charts. One being managed lazily through a roll. One being avoided cleanly until the system clears its extreme. One running the playbook to target. Last Friday of the month adds the scrappy overlay.

SPX Analysis

SPX swings flipped bullish and back to bearish just as quick. Bear swing kept – will likely roll today if we don’t get a down move. Lazy more than anything. Bearish Below 7,559.16, PFZ 7,566.91, Target 7,489.54.

SPX swings flipped bullish and back to bearish just as quick. I’ve kept my bear swing and will likely roll it today if we don’t get a down move today.

I’m just being lazy here more than anything, as I was out most of yesterday. Thankfully an easy fix to roll and still come out on top.

Current Status: Bearish Below 7,559.16 / PFZ 7,566.91 / Target 7,489.54

Gamma Exposure

Gamma flip 6,858.36, well below cash. Put wall 7,400, call wall 7,600. Big call gamma node at 7,600. IV 13.28%, IV Percentile 36%.

The flip sits well below cash, deep in positive gamma. The put wall is at 7,400 and the call wall at 7,600, with the largest call gamma node on the board at 7,600.

IV at 13.28% against historic 10.06%, with IV Rank 16.73% and IV Percentile 36%.

Current Status: Flip 6,858.36 / Put Wall 7,400 / Call Wall 7,600 / IV 13.28% / HV 10.06% / IVR 16.73% / IVP 36%

RUT Analysis

RUT still in avoid mode due to the MACD-v reading – the system updates are doing their job well here. Gliding into a BBW pinch / range. Waiting for the breakout makes sense. Monday is soon enough for a new trade. Bearish Below 2,935.61, PFZ 2,942.61, Target 2,903.77.

RUT is still in avoid mode due to the MACD-v reading – so the system updates are doing their job well here.

We are also gliding into a BBW pinch / range, so waiting for the breakout makes sense. Monday is soon enough for a new trade here, and we should be out of the MACD-v extreme danger zone by then.

Current Status: Bearish Below 2,935.61 / PFZ 2,942.61 / Target 2,903.77 / avoid mode

BTC Analysis

BTC continues its down move. Now in breakout mode looking for a push to 70.5k as the breakout target.

BTC continues its down move. We are now in breakout mode and looking for a push to 70.5k as a breakout target.

The Range Breakout Target annotation on the 4-hour chart sits near 70,500.

Current Status: Down move continues / breakout mode / Range Breakout Target ~70.5k

Rounding Off

Records On A Memo Nobody Signed. Wall Street closed Thursday at a record – SPX 7,563.63, Nasdaq 26,917.47 – on the news of a tentative 60-day memorandum to reopen the Strait of Hormuz. The memo has two features worth noting: nobody has signed it, and it landed hours after the US and Iran exchanged fresh strikes. The market, having weighed the missiles against the unsigned memo, went with the cheerful option. Eighth winning week in nine. The breadth stayed roughly three names wide and seemed rather proud of it.

The Cycle Is Doing What Cycles Do. April PCE printed 3.8%, the highest since May 2023, and the equity tape politely ignored it. Rate cuts long promised quietly became rate hikes. Kevin Warsh gets the invoice in mid-June. The “markets only go up” run is frustrating to live and trade through, but cycles are cycles – this isn’t the first time and won’t be the last. The discipline is to trade small and keep consistent to the system and the process. A consolidation 5-10% wouldn’t be unrealistic and frankly the price behavior across the time frames would benefit from the reset.

Expert Insights

Thursday’s tape closed at a record on the strength of an unsigned 60-day memo that arrived hours after fresh strikes. The breadth was three names wide. Salesforce posted respectable numbers and was fined 2% for it. Snowflake guided higher and got +36.5%, its best session on record. The VIX sat at 15.74 declaring the proceedings entirely calm.

This is the configuration Marks’s line is built for. Not a call for a crash. A call to read the optimism honestly and price the risk that goes with it. Trade small. Keep the system. The cycle will do what cycles do.

[Source: Howard Marks memos, Oaktree Capital Management, oaktreecapital.com, public]

Fun Fact:

The last trading day of the month is one of the most studied dates in equity-market microstructure. Fund managers running portfolios benchmarked against a quarterly performance window engage in what academic researchers call “window dressing” – rebalancing toward the period’s winners and away from the laggards before the books close, so the holdings list on the statement looks consistent with the performance.

The effect is well-documented. Concentrated buying in the recent winners and concentrated selling in the recent losers through the last few sessions of any month-end. The signature in the tape is uneven, occasionally scrappy price action – not driven by news, but by quarter-end positioning that has to settle before Monday’s print.

On a Friday close that ends with an eighth up week in nine, where leadership has narrowed to roughly three names, the window-dressing flow tilts heavily toward those same three names. The scrappy is structural, not coincidental.

[Source: academic finance literature on window dressing, including Lakonishok et al,
Window Dressing by Pension Fund Managers,
NBER Working Paper, public]

Trade well,
T2 Markets

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