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 -1.26% on Wednesday to settle @ 7492.75. Hedgeye’s risk range for the SEPTEMBER futures contract coming into Tuesday’s session was 7701 at the top and 7332 at the bottom (red lines on the chart above). The VIX finished Wednesday’s session near 18.53. Option dealer gamma closed Wednesday nearly on top of the option dealer gamma flip line (blue line on the chart above). In negative gamma (below the blue line), option dealers SELL weakness and BUY strength which tends to exacerbate higher volatility. In positive gamma, (above the blue line), options dealers SELL rallies and BUY dips which tends to compress volatility. Market Outlook 18 of 19 Federal Reserve Board members submitted their dot plot forecast for future interest rate changes (Warsh did not participate because he believes the dot plots hold little value). It turns out that 9 of 18 Fed members currently lean toward a rate hike in 2026, a more hawkish stance than expected. Warsh announced five hand-picked independent “task force” groups to recommend changes to the way the Fed operates. At the end of the day, markets appeared to be unsettled by the Fed’s hawkish dot plot stance and a new guy at the helm proposing changes to the institution likely added an element of uncertainty. As a result, the SPX closed at 7420, below Hedgeye’s key 7449 trade support level and just above Tier1 Alpha’s 7403 gamma flip line. Repeating what we said yesterday, from Hedgeye’s perspective, a close below 7449 for the SPX would be an early warning of more immediate downside risk ahead. Tier1 Alpha adds that a move below 7403 would flip option dealers to selling into weakness which would dramatically increase the risk of additional selling from vol control funds and CTAs. As you can see from the chart below, CTAs are nearly max long in terms of their equity exposure. Correction: Thursday is the quarterly options expiration where a record roughly $5 trillion in S&P 500 options are set to expire. Markets are closed on Friday in observance of Juneteenth. Regarding the crude oil market, today we got the weekly EIA inventory report, and it was a massive -17 million barrel inventory draw. The oil data initially spiked prices higher only to see oil futures finish the day near unchanged. Cushing, Oklahoma, the largest US commercial oil storage hub is literally at tank bottoms. According to the CME’s FedWatch Tool, rate markets are now saying that rate hike expectations have been pulled forward to (odds > 50%) the 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 slipped -0.51% on Tuesday to settle @ 7626.50. Hedgeye’s risk range for the SEPTEMBER futures contract coming into Tuesday’s session was 7717 at the top and 7338 at the bottom (red lines on the chart above). The VIX finished Tuesday’s session near unchanged at 16.22. Option dealer gamma remains in positive territory as of Tuesday’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 Tuesday’s selling was concentrated in tech stocks, but all three main stock indices still finished in the red. Looking at the S&P 500 sectors, 6 of 11 sectors finished in the green. Leveraged ETFs such as the SOXL 3X Semiconductor Bull pose a risk to the broader market. Tuesday the SOXL dropped -17.06%. This week’s potential market catalysts include: • Wednesday’s FOMC meeting will be the first with Kevin Warsh as Fed Chairman. Markets expect no change in monetary policy. We assume he will do a press conference at this meeting like his predecessor, but he has indicated that he favors major changes in how the Fed operates and communicates. In that light, he may have a lot to say. Will the market like what it hears? • Energy markets – oil prices have fallen hard on a potential peace deal with Iran. However, oil inventory buffers around the world, including in the USA, are extremely tight. If re-opening the Strait of Hormuz takes too long, oil prices risk running back above $100. • Friday’s record $5 trillion (notional) quarterly options expiration where the 7500 and 7600 call strikes have the highest open interest. According to the CME’s FedWatch Tool, rate markets are saying that the most likely date for a rate hike (odds > 50%) is no sooner than the December 28, 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 June S&P 500 jumped 1.70% on Monday to settle @ 7561.25. Hedgeye’s risk range coming into Monday’s session was 7632 at the top and 7247 at the bottom (red lines on the chart above). The VIX finished Thursday’s session near 16.20. Option dealer gamma is firmly back in positive territory Monday’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 Monday’s big rally in equities was sparked by weekend news that the US and Iran have agreed on broad points in order to end the war. The pressure was on the US to make a deal quickly as oil reserve buffers are running dangerously thin ahead of the mid-term elections. Oil crisis averted? We are not so sure. Tier1 Alpha’s capital allocation model remains in “risk off” mode despite a strong three-day rally in the S&P 500. According to Tier1 Alpha, the rise of levered ETFs is adding a component of potential market instability to the current market structure. While admitting that the path of least resistance is still pointed higher in the very short-run, what goes up a lot driven by leverage opens the possibility of a sharp sell-off when markets ultimately change direction. Since Tier1 Alpha put out the tweet below, the S&P 500 has moved back into positive gamma territory, reducing the immediate risk of a sharp sell-off. However, the next time option dealer gamma flips negative (falls below the blue line on the chart above), leveraged ETFs, CTAs, Vol Control funds and option dealers would likely all be mechanical sellers at the same time. This Wednesday’s FOMC meeting will be the first with Kevin Warsh as Fed Chairman. Markets expect no change in monetary policy. We assume he will do a press conference at this meeting like his predecessor, but he has indicated that he favors major changes in how the Fed operates and communicates. In that light, he may have a lot to say. Will Warsh maintain his anti-QE stance on Wednesday? Whatever Warsh says on Wednesday, we would not be surprised if equity markets react negatively. According to the CME’s FedWatch Tool, rate markets are saying that the most likely date for a rate hike (odds > 50%) is no sooner than the December 28, 2026 FOMC meeting.