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 gained +0.37% on Tuesday to settle @ 7591.25. Hedgeye’s risk range for the Sept. futures contract coming into Friday’s session was 7626 at the top and 7498 at the bottom (red lines on the chart above). For the S&P 500, 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 Thursday’s session near 16.50. Option dealer gamma remains in positive mode 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 The June CPI dis-inflated 72 basis points from May to come in at 3.53% YoY, more than the 42 bps deceleration that Hedgeye forecasted weeks ago. Despite the deceleration in CPI inflation, rate markets are still pricing in a greater than 50/50 chance of a rate hike on September 16. According to Polymarket, rate hike odds in 2026 dropped from 73% before the CPI report to 53% after. Looking ahead, the VIX is firmly entrenched in the investible bucket and there is little chance that systematic strategies such as CTAs and Vol Control funds will be sellers anytime soon unless there is a material uptick in realized volatility. Earnings season is just getting underway and the big banks finished Tuesday’s session mostly higher, led by JPM. The war in the Middle East remains a key risk to the global economy, but unless oil prices move above $100/barrel, US markets are unlikely to react. That being said, conditions are certainly in place for oil to make a move well above $100 in the weeks/months ahead. 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 dropped -0.75% on Monday to settle @ 7563.00. Hedgeye’s risk range for the Sept. futures contract coming into Friday’s session was 7636 at the top and 7450 at the bottom (red lines on the chart above). For the S&P 500, 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 Thursday’s session near 17.16. 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 South Korea’s KOSPI crashed -9% overnight which led to losses on Monday in the US tech sector, particularly in semiconductor stocks. Despite the losses in tech stocks, 6 of 11 S&P 500 sectors finished Monday’s session in the green. A restart of the war with Iran over the weekend spiked energy prices on Monday as well. In fact, heating oil futures, which is a proxy for diesel and jet fuel, spiked 8% and is approaching its May high. Adding to investor angst, Fed governor Waller on Monday stoked rate hike fears by implying that a near-term rate hike is on the table if inflation data comes in hot. In our view, rate hike worries may be short-lived as we are likely to see a 40 bps deceleration in the June CPI report before Tuesday’s opening bell. 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 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.