Technical Indicator Summary Daily RSIs for the S&P 500 and Russell 2000 are in neutral territory (>30 and <70). Technical Review The September S&P 500 gave back -0.42% on Friday, settling @ 7722.00. The VIX finished Friday’s session near 14.53. Option dealer gamma remains in positive mode as of Friday’s close. When option dealer gamma is positive, option dealers mechanically BUY weakness and SELL strength to hedge their exposure. Positive gamma for option dealers increases the odds of LOWER realized volatility and SMALLER percentage moves up or down from one day to the next. When option dealer gamma is negative, option dealers mechanically SELL weakness and BUY strength to hedge their exposure. Negative gamma for option dealers increases the odds of HIGHER realized volatility and LARGER percentage moves up or down from one day to the next. Market Outlook A stronger than expected jobs report increased September 16 rate hike odds from 49.6% on Thursday to 58.4% at Friday’s close. With the August jobs numbers in the rearview mirror, focus will quickly shift to next Friday’s August CPI report (with some forecasts of a 14 bps MoM increase to 3.50%). Will that be enough to move the Fed to hike rates by 25 bps on September 16? We remain skeptical, but rate markets are pricing a coin toss. Vol Control funds are set to be buyers again late next week heading into the August CPI report. For now, the VIX remains muted, with stocks in a bullish setup through the end of the year. A surge in energy prices remains a key risk for equities. According to the CME’s FedWatch Tool, rate markets are pricing a 58.4% chance that the Fed hikes rates by 25 bps at its September 16, 2026 FOMC meeting.

Technical Indicator Summary Daily RSIs for the S&P 500 and Russell 2000 are in neutral territory (>30 and <70). Technical Review The September S&P 500 jumped +1.02% on Thursday, settling @ 7754.75. Hedgeye’s risk range for the Sept. futures contract coming into Thursday’s session was 7776 at the top (lower high) and 7640 at the bottom (red lines on the chart above). For the S&P 500, there are three volatility regimes: 1) the bullish investible bucket (VIX < 19), 2) the chop bucket, (VIX = > 19 and < 29), and 3) the bearish F-bucket (VIX > 29). The VIX finished Thursday’s session near 14.31. Option dealer gamma remains in positive mode as of Thursday’s close. When option dealer gamma is positive, option dealers mechanically BUY weakness and SELL strength to hedge their exposure. Positive gamma for option dealers increases the odds of LOWER realized volatility and SMALLER percentage moves up or down from one day to the next. When option dealer gamma is negative, option dealers mechanically SELL weakness and BUY strength to hedge their exposure. Negative gamma for option dealers increases the odds of HIGHER realized volatility and LARGER percentage moves up or down from one day to the next. Market Outlook The US Dollar Index is negatively correlated to US equities (and gold). The US Dollar Index rolled over on Thursday for several reasons; 1) the US Treasury intervened in the currency markets by selling dollars and buying yen, and 2) Fed Governor Waller said he leans toward keeping the federal funds rate unchanged at the September FOMC meeting. In addition to a weaker dollar, according to Tier1 Alpha, Vol Control funds were set to buy roughly $17 billion in US equity exposure on Thursday. In fact, Tier1 Alpha expects Vol Control funds to be buyers of US equities in 6 of the next 10 trading sessions as volatile returns drop out of their 30 and 90-day lookback windows. Furthmore, if Friday’s August jobs report is weak, look for rate hike odds to fall further, the US Dollar Index to drop again, and equities and gold to move higher again. According to the CME’s FedWatch Tool, rate markets are pricing a 49.6% chance that the Fed hikes rates by 25 bps at its September 16, 2026 FOMC meeting.

Technical Indicator Summary Daily RSIs for the S&P 500 and Russell 2000 are in neutral territory (>30 and <70). Technical Review The September S&P 500 sank -0.73% on Tuesday, settling @ 7642.75. Hedgeye’s risk range for the Sept. futures contract coming into Tuesday’s session was 7761 at the top and 7640 at the bottom (red lines on the chart above). The VIX finished Friday’s session near 16.47. Option dealer gamma flipped to negative mode as of Tuesday’s close. When option dealer gamma is negative, option dealers mechanically SELL weakness and BUY strength to hedge their exposure. Negative gamma for option dealers increases the odds of HIGHER realized volatility and LARGER percentage moves up or down from one day to the next. When option dealer gamma is positive, option dealers mechanically BUY weakness and SELL strength to hedge their exposure. Positive gamma for option dealers increases the odds of LOWER realized volatility and SMALLER percentage moves up or down from one day to the next. Market Outlook Defensive S&P sectors plus the energy sector were the only winners on Tuesday. Crude oil rose nearly 6% on Tuesday while Heating Oil futures jumped 7% to a new all-time high. Despite Tuesday’s negative close, realized volatility remains subdued. A -0.73% drop just isn’t going to change the fact that. Vol Control funds will likely become buyers over the next two weeks. The VIX remains in the investible bucket, however, dealer gamma is now negative, so there is an opening here for increasing volatility. This Friday’s August employment report may be decisive in determining the Fed’s decision at its September 16, FOMC meeting. A weak jobs number would likely keep the Fed on hold even if we see a slight uptick in the August CPI report on September 11. In other words, a bad jobs number on Friday may be bullish for the S&P 500 and vice versa. If you are bearish, Friday’s jobs number is a high risk event for a strong snap-back rally. According to the CME’s FedWatch Tool, rate markets are pricing a 68.2% chance that the Fed hikes rates by the September 16, 2026 FOMC meeting.