Let The Room Read Warsh’s Lips. I’ll Read The Tape

• Warsh chairs his first FOMC, the decision lands at 2pm with the dot plot and his debut press conference at 2:30, the event the whole week has pointed at.
• A hold is near-certain, the fourth straight at 3.50% to 3.75%, so the dot plot and the tone are the event, not the rate.
• The 2-year still sits above the policy rate pricing a hike, while the 10-year slid to a three-week low at 4.44%, the curve disagreeing with itself.
• Tuesday split hard: the Dow set a record at 51,999.67 while the Nasdaq fell 1.15%, a duration story rather than a fear story.
• Oil near $75 and housing starts down 15.4%, the rate-sensitive corner cracking while the Fed eyes a hike.
• Friday is Juneteenth, US markets are shut, and the deal signs that day, so today is the only session this week that bites.

Market Snapshot

• ES (S&P 500): 7,599.00 / +0.21% / nibbling at the 7,648.75 NATHs again, I’d expect a little kickback first
• YM (Uncle Dow): 52,445 / -0.04% / unchanged, NATHs 52,638
• NQ (NazQuack): 30,514.00 / +0.70% / NATHs 30,975.50
• RTY (Uncle Russell): 2,967.3 / +0.16% / clear range on the 30 minutes, NATHs 3,012.9
• GC (Gold): 4,342.6 / -0.24% / sideways to bear playing out, push lower likely before the bull resumes
• CL (Crude): 75.45 / -1.53% / no separate read today, I dropped the ball on the bull call, no harm no foul
• VIX: 16.31 / -0.67% / near the 13.38 year low
• BTC/USD: 64,888.11 / -1.11% / waiting on the big move, below 58.5k the bull bet is off

Tag ‘n Turn

The indices are reading the same way, and it is a question of timing more than direction. SPX is the tighter leash: still a bull setup on the data, but one day out of the MACD-v extreme, so a new bear is a possibility and the rising Bollinger band lows mean a lower band tag is back on the table. Uncle Russell is two days out, back to normal, the bear available, sat in a clear range with a Williams %R bear extreme.

Either way the trade is the same on Russell, the range lows do the work whether you take the range trade or the Tag ‘n Turn. Elsewhere, BTC waits on the big move with higher lows to defend, and Gold needs its push lower and a higher low before the bull resumes.

SPX Analysis

SPX swings stay on a tight leash. The MACD-v extreme is the main reason, because the data still reads this as a bull setup for the moment. The catch is the expiry date: we are one day out of the extreme, so new bear setups become a possibility, and once we are two days out we are back to normal. Meanwhile the rising Bollinger band lows are catching up with price, so we may get that lower Bollinger band tag after all. The dailies hint at a new, quite wide range zone where we grind sideways, which could keep volatility elevated even as it cuts the range rug.

Tight leash, the bull setup has an expiry date.

Gamma Exposure

Tuesday’s close put the gamma flip at 7,385.10, with the put wall and call wall converged at 7,500.00 and the cash at 7,511.35. Implied volatility reads 13.61% against historic at 14.39%, with IV Rank at 18.83% and IV Percentile at 44%. The read I care about is the huge pin at 7,500, which may reinforce the small down we have already had, followed by the continuation up.

A huge 7500 pin, small down then the continuation up.

RUT Analysis

Uncle Russell’s MACD-v is out of the extreme for two days now, so we are back to normal and the bear is available. Price is in a clear range on the 30 minutes, and a Williams %R bear extreme might suggest further down moves. A breakout could show a 60 point move to target, and the bull Tag ‘n Turn, should it set up, sits conveniently at the range lows. So it is normal service either way, whether you wait for the range trades or the Tag ‘n Turn trades. The larger daily picture looks like a consolidation again, and as we are at the upper end, a move lower could be the likely path.

Range or tag, normal service either way.

BTC Analysis

BTC is doing its thing and just waiting for the big move to get underway. What we need to see now is the higher lows hold, and we may see those newer rising VWAPs get challenged before the resumption of the bull move. The line in the sand is clear: below 58.5k the bull bet is off and the bear charge to 50k is back on.

Higher lows hold, below 58.5k the bull bet’s off.

Rounding Off

Everything today is throat-clearing before 2pm. Tuesday split itself in half, the Dow printing a record at 51,999.67 while the Nasdaq fell 1.15%, which the desks are reading as a duration story rather than a fear story, growth promises repricing as the discount rate twitches. The 10-year slid to a three-week low at 4.44% on cheaper oil, while the 2-year stayed parked above the policy rate, pricing a hike into the debut of the chair hired to cut.

So the dots print at 2pm, Warsh speaks at 2:30, and the front end finds out whether it was early or simply right. Friday is Juneteenth, US markets are shut, and the framework is flagged to sign that day, so the one event everyone is waiting on cannot be traded. Today is the session that bites, which is exactly why I’d rather follow the setups than the soundbites.

Expert Insights

John Kenneth Galbraith, the economist who never lost his sense of humour about his own profession, put today in one line:

“The only function of economic forecasting is to make astrology look respectable.”

It is the perfect frame for a 2pm dot plot. A room full of clever people will spend the afternoon parsing Warsh’s phrasing and the gaps between his words, as if a tone of voice settles where price goes next. Maybe it moves the tape for an hour. It does not change my job. The data gives me a bull setup with an expiry date, a range on Russell, a pin at 7,500. Those are testable. A forecast is a horoscope with a spreadsheet. Follow the setups to keep sanity.