Technical Indicator Summary Daily RSIs for the S&P 500 and Nasdaq 100 are in neutral territory (>30 and <70). Technical Review The September S&P 500 added +0.42% on Friday to settle @ 7620.25. Hedgeye’s risk range for the Sept. futures contract coming into Friday’s session was 7649 at the top and 7397 at the bottom (red lines on the chart above). The VIX finished near 15.05. Option dealer gamma remains in positive mode as of Friday’s close. Recall that 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 An hour into Friday’s session, the S&P 500 experienced a mini-crash as the September futures dropped 50 handles in seconds. Our best guess is that an algo read one of Trump’s social media posts and hit the sell button. However, it did not take long for the S&P 500 to recover. In positive gamma, option dealers buy dips, so that mechanical action likely helped bulls recover. In addition, Tier1 Alpha estimates that Vol Control funds were buying roughly $18 billion in S&P 500 exposure on Friday thanks to falling 30-day and 90-day realized volatility. After the early fireworks, vol control buying appears to have taken over for a steady rally into the close. We look for the S&P 500 to press upwards early next week. On Thursday and Friday, it is likely that the market machine started discounting next Tuesday’s (likely dovish) June CPI report. With energy prices on the downslope, it's possible that July's figure could also see a larger deceleration than anticipated. Rate markets may be mispricing future Fed policy. In other words, too many rate hikes are priced in. In fact, we think the next Fed move will likely be a rate cut, not a hike. Therefore, a dovish CPI could give the S&P 500 an added boost in the short-run. According to the CME’s FedWatch Tool, rate markets are still saying that they expect a rate hike (odds > 50%) at the September 16, 2026 FOMC meeting.

Technical Indicator Summary Daily RSIs for the S&P 500 and Nasdaq 100 are in neutral territory (>30 and <70). Technical Review The September S&P 500 jumped +0.80% on Thursday to settle @ 7588.75. Hedgeye’s risk range for the Sept. futures contract coming into Thursday’s session was 7620 at the top and 7353 at the bottom (red lines on the chart above). The VIX finished Thursday’s session near 15.86. Option dealer gamma remains in positive mode as of Thursday’s close. Recall that 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 The S&P 500 rose on Thursday, led by the tech sector. It is notable that defensive sectors and energy finished in the red. As noted in this morning’s trade alert, the US Dollar Index could be hitting a wall. In addition, multiple MAG-7 stocks could be flipping from a bearish to bullish tone. Vol Control strategies are expected to be adding to their long S&P 500 exposure as 30-day and 90-day realized volatility levels are falling as prior volatile returns drop out of their respective look-back periods. Recall that as long as the signal triggers, mechanical buying from Vol Control strategies occurs regardless of fundamentals headlines. The S&P 500 may also be looking ahead to next Tuesday’s June CPI report. with an energy driven decline in the June CPI a strong possibility, which should ease rate hike fears, and could offer ammunition for stock bulls. The big banks also kick off Q2 earnings season next Tuesday. According to the CME’s FedWatch Tool, rate markets are still saying that they expect a rate hike (odds > 50%) at the September 16, 2026 FOMC meeting.

Technical Indicator Summary Daily RSIs for the S&P 500 and Nasdaq 100 are in neutral territory (>30 and <70). Technical Review The September S&P 500 slipped -0.30% on Wednesday to settle @ 7528.75. Hedgeye’s risk range for the Sept. futures contract coming into Wednesday’s session was 7598 at the top and 7348 at the bottom (red lines on the chart above). There are three volatility regimes: 1) the investible bucket (VIX < 19), 2) the chop bucket, (VIX = > 19 and < 29), and 3) the F bucket (VIX > 29). The VIX finished Wednesday’s session near 16.81. Option dealer gamma remains in positive mode as of Wednesday’s close. Recall that 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 A bounce in the S&P 500 tech sector was not enough to keep the S&P 500 out of the red on Wednesday even though it got an assist from the Energy sector. Despite trading below 7500 on Wednesday, the September S&P 500 still managed to trim intraday losses by Wednesday’s close and finish in positive gamma. Middle East headlines have returned to spook bulls as well as energy prices. Oil prices jumped nearly 6% on Wednesday while heating oil soared nearly 13%. As a result of US supplies drawing down close operational minimum levels, energy prices may come back as a source of risk for the S&P 500 in coming weeks/months. According to the CME’s FedWatch Tool, rate markets are still saying that they expect a rate hike (odds > 50%) at the September 16, 2026 FOMC meeting. We expect rate hike odds to fall materially after next week’s June CPI report. In fact, despite what is being priced into financial markets, we think the Fed’s next move is a cut, not a hike.