Futurity Dictates Today
Unusual Flow Debrief
Futurity dictates today. Every decision we make on this desk, every contract we track, every level we mark, exists for one reason: to position us to succeed in the future. Sometimes that means sitting in cash while uncertainty burns itself out. Sometimes it means pressing long term bets whose theses have not moved an inch while the headlines scream about geopolitics and rate hikes. The discipline is knowing which one the moment calls for, and the flow we watch every day is how we take that read.
It has been rough sledding through June so far. The nine week win streak that carried us out of spring is likely over, the chip complex gave back over a trillion dollars in market value in two sessions, and the rate cut narrative that powered the whole first half got taken out back by a single jobs print. That is the bad news. The good news is what we are seeing, is pretty typical. We will get to all of it.
Quick framing before we dive in: nothing about the last week changes the structural story. AI infrastructure demand did not get weaker necessarily. Power demand did not shrink because the 10 year backed up. What changed is the price of admission. Multiples compress when yields rise, and positioning that got stretched over nine green weeks needed to reset. That reset is happening now. Our job is to act today in service of where we want to be standing six months from now, and that means respecting the reset without panicking out of theses that remain intact.
Le Charts
Start with SPY. We printed 760 two weeks ago and we are now trading 725, down 1.6% on the week so far. Here is what matters: price is sitting directly on the 10 week moving average at 726.61, and the rising channel that has defined this entire move from the 2025 lows is fully intact. The 749.53 breakout level is now overhead resistance. Below us sits 699 and the 689.70 shelf, with the 50 week all the way down at 676 and change. A pullback to the 10 week after a nine week run is not a breakdown. It is the most normal thing a bull market does. Lose 689 on a weekly close and we have a different conversation. Until then this is a reset inside an uptrend.
QQQ is the same picture with sharper edges, because tech took the brunt of the selling. We are at 693 after tagging 740, and price is sitting just below the 695.93 shelf with the 10 week at 687 and change just beneath. That 687 to 696 zone is the line. Hold it and the bounce comes from a logical spot. Lose it and 629 is the next real shelf, which would be a much deeper flush than anyone positioned for. Given how fast the selling came and how stretched the RSI was at the highs, a tag of the 10 week here is constructive, not scary.
Now the chart that tells you this is rotation and not liquidation: IWM. Small caps are battling to close green this week, up 0.14% while every large cap index bled. We are at 282 with the highs at 290.87, holding above the 10 week at 279.40. When money flees a market, it does not flee into small caps. When money rotates out of crowded mega cap tech and into the rest of the tape, this is exactly what it looks like. Breadth expanding while the indices pull back is one of the most reliable tells that the underlying bid is alive.
The Dow rounds it out at 49.9k, off the 51,282 record from last week, down 1.9%. The 10 week sits at 49,765 right below price, then 48,756 and 47,752 beneath that. Same structure as SPY: extended, pulling back to the short term mean, channel intact.
Headlines and Headwinds!
The sequence that broke the streak started Thursday June 4. Broadcom reported a beat but left its full year AI chip targets unchanged, with the Q3 AI revenue guide coming in light of what the street wanted. After nine weeks of AI is invincible, that was enough. Chips rolled Thursday and then Friday turned into a rout: the Nasdaq lost over 4% for its worst session since the tariff chaos of April 2025, NVDA briefly gave back the $5 trillion mark, and AMD and INTC both shed double digits.
Friday’s accelerant was the May jobs report. 172,000 payrolls against expectations near 80,000, with unemployment steady at 4.3%. The 10 year spiked toward 4.5% and the market did the math instantly: no June cut, and hike odds for later this year started creeping into the futures. A blowout jobs number used to be good news. In this regime it is a yield shock, and yield shocks hit the longest duration assets hardest, which is exactly why the QQQ wore it.
Then this morning we got May CPI, and the internals matter more than the headline. Headline came in hot at 0.5% on the month and 4.2% year over year, driven by the energy passthrough with Brent still holding above $100 while the US and Iran ceasefire does its uneasy thing. But core printed 0.2% on the month and 2.9% annual, which is cooler than feared. That split is the whole game right now: the oil shock is in the headline numbers, the underlying trend is not accelerating. My fabled ‘Delayed Detonation’ thesis that was never officially released, but discussed in length in discord, spoke of how we flagged the energy passthrough as the slow moving second order effect of the Hormuz disruption. It is now showing up in the official prints, right on schedule. Maybe I’ll release the files.
Next week is the main event. The FOMC meets June 16 and 17, a hold is near certain per the futures, and the real catalyst is how Chair Warsh frames the path with oil above $100 and core behaving. Add the WWDC reception that landed flat for Apple on Monday and you have a market with no shortage of reasons to chop until Wednesday afternoon.
The Environment
So what is the regime? Rates are the tape again. Today’s ‘hot’ / in-line headline CPI is exactly the kind of print that reminds you of that. We hold the thesis and we respect the sensitivity. Both things are true.
The setup into the rest of the week & next week: indices sitting on their 10 week averages, small caps marginally green, breadth improving, core inflation behaving, and a Fed that is almost certainly on hold. That is not a bearish cocktail. It is a market that needed to flush some excess and is doing it in an orderly rotation rather than a liquidation. The caution is real because the FOMC presser is a live grenade and oil above $100 keeps the headline inflation risk alive. The optimism is real because everything that matters dare I say, needed this. This is where futurity earns its keep. If the future you are positioning for requires the AI buildout to continue, the power demand curve to steepen, and rates to eventually normalize, then nothing this week broke your map. Raise cash where conviction is thin, press duration where conviction is fat, and let the headlines belong to people trading the next four hours instead of the next four quarters. Rough sledding so far in June, better weeks ahead if next Wednesday cooperates.
