Technical Indicator Summary Daily RSIs for the S&P 500 and Russell 2000 are in neutral territory (>30 and <70). Technical Review The June S&P 500 traded in a 2.3% range on Monday to finish the session up +0.98%, settling @ 6922.75. The S&P 500 is on a 7-day winning streak, printing more than a +7% gain, which doesn't occur often...only 3 other times in the last 30 years. The VIX finished Monday’s session near 19.13. According to Tier1 Alpha, option dealer gamma remains in positive mode as of Monday’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. If the June S&P 500 closes back below 6778, the option dealer gamma will flip back to the negative side. Market Outlook On Sunday afternoon, oil futures spiked $8 per barrel and S&P 500 futures sank -1.3% as Iran/US peace talks ended without an agreement. However, by Monday’s close, S&P 500 futures had erased their overnight loss and were up nearly 1% while crude oil futures pared its rally to just up $2.50 per barrel. Apparently, there is still hope for a peace deal. CTAs are largely momentum traders have been big buyers on the recent rally. The June S&p 500 will need to close back below 6800 to flip the script back to a more dangerous market regime. At the moment, bulls clearly have the upper hand despite the mess in the Middle East. In fact, the Nasdaq 100 has just posted its strongest 9-day advance since at least 2009. Earnings season kicks off on Tuesday with the big money-center banks led by JP Morgan. Exposure to private credit risk is likely to be a focus. According to the CME’s FedWatch Tool, rate markets are pricing just a 0.5% probability that the Fed RAISES rates at its April 29 FOMC meeting (the last FOMC meeting of the Jerome Powell era). Rate markets are saying there is a zero chance of a rate cut on April 29.

Technical Indicator Summary Daily RSIs for the S&P 500 and Russell 2000 are in neutral territory (>30 and <70). Technical Review The June S&P 500 added +0.58% on Thursday, settling @ 6863.25. The VIX finished Wednesday’s session near 19.67. 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. If the June S&P 500 closes back below 6778, the option dealer gamma will flip back to the negative side. Market Outlook The S&P 500, Nasdaq 100 and Russell 2000 have all broken back to bullish trend. As a result, we have shifted our outlook to neutral. The problem for equity bulls is that the S&P 500, Nasdaq 100, and Russell 2000 all closed Thursday’s session at the top of their respective recent risk ranges, as per Hedgeye. WTI crude oil remains bullish trend despite Wednesday’s pullback. May WTI Crude Oil futures bounced $4 on Thursday. Before Friday’s open, we get the March CPI report. The Hedgeye base case for the April 10 March CPI report is +3.31% YoY (within a range of 3.20% to 3.42%), up 90 bps from the February CPI report. That might be a record monthly jump in the consumer price index. Hedgeye is already forecasting another 40 bps increase for the April CPI report at +3.71%. According to the CME’s FedWatch Tool, rate markets are pricing just a 1.6% probability that the Fed RAISES rates at its April 29 FOMC meeting (the last FOMC meeting of the Jerome Powell era). Rate markets are saying there is a zero chance of a rate cut on April 29.

Technical Indicator Summary Daily RSIs for the S&P 500 and Russell 2000 are in neutral territory (>30 and <70). Technical Review The June S&P 500 jumped +2.51% on Wednesday, settling @ 6823.75. The VIX finished Wednesday’s session near 21.27. Option dealer gamma flipped to positive mode as of Wednesday’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. If the June S&P 500 closes back below 6778, the option dealer gamma will flip back to the negative side. Market Outlook Wednesday’s huge rally was sparked by news of a ceasefire between the US and Iran. WTI oil prices dropped -15% on Wednesday and did not bounce much as the ceasefire deal appeared to fall apart. Israel attacked Lebanon while the gulf Emirates bombed Iran’s energy and petrochemical operations in a tit-for-tat attack. We would not be surprised to see the equity market rally fail soon once the oil market realizes that the Strait of Hormuz remains shut and gulf energy infrastructure continues to be degraded/destroyed with each passing day. Our opinion is that enough damage has already been done that it will take many months, and in some cases years, for energy infrastructure to be repaired and brought back to pre-war levels. This means higher for longer energy prices and a significant drag on global GDP in the months/year(s) ahead. Setting aside events in the Middle East, the next big economic catalyst likely comes on Friday with the March CPI report. The base case for the April 10 March CPI report is now +3.31% YoY (within a range of 3.20% to 3.42%), up 90 bps from the February CPI report. That might be a record monthly jump in the consumer price index. According to the CME’s FedWatch Tool, rate markets are pricing just a 0.5% probability that the Fed RAISES rates at its April 29 FOMC meeting (the last FOMC meeting of the Jerome Powell era). Rate markets are saying there is a zero chance of a rate cut on April 29.