 Hey everyone, it's Mike Kramer of Mock Capital with a weekly check-in here before the big FOMC and ECB announcements later this week FOMC obviously Wednesday afternoon ECB Thursday morning, so a lot of stuff to sort of digest and think about as we go through the balance of this week And what it potentially means for the markets We'll start off with the with the odds for a rate hike here market clearly giving the Fed a green light 87% chance of a rate hike tomorrow. This number has been changing a lot lately Odds have been all over the place not so much for May But really what we're looking at and thinking about for the market for June and it's not really surprising I guess that the odds are basically at 0% the market's basically saying it has no clue what the Fed's next move is here because You can see that we had been Risely rising pretty sharply this was obviously the SVB scenario and you've had you know since then clearly markets pricing in more rate hikes coming Potentially one coming in June and then today you had you know the weakness obviously over the weekend with first Republic More weakness in the regional banks today plus the jolts number came in Lower than expected and that basically, you know put push those odds Lower again and the number that pal likes to look at quite a bit is this ratio of Jobs that the total job openings divided by the unemployment the number of people unemployed and That number right now that ratio is about 1.64. So basically about 9.5 million job openings About 6 million unemployed people gives you that ratio and you can see that despite the number coming down There's still a long long way to go For the Fed before it gets to where it needs to be in order to say that You know its mission has been accomplished in terms of you know rebalancing the labor market The other thing obviously ISM prices paid index prices paid component for the manufacturing PMI actually ticked higher when it was released yesterday and That's not really all that unexpected given the fact that we've seen Copper prices tick higher in recent months copper and the ISM prices paid index tend to go hand-in-hand Although usually the prices paid index trials copper by just a little bit So not surprising to see the prices paid index finally beginning to move up And that's going to also put a little emphasis on tomorrow's services PMI prices paid index because that will also be coming out and believe it or not copper has a pretty strong correlation with The services index as well and you can see again Potentially suggesting a little bit of an uptick inflation is due to come for the services index as well. And so You know whether or not you believe the Fed's job is done another question, but certainly It seems and appears to be that the Fed is Unlikely to go through this process of cutting rates as you've been seeing in the Fed fund futures At least if you sort of start thinking about how much work is still left For the the job market and especially, you know, how much how high inflation remains So you can see right now market pricing in about 60 basis point in rate cuts following tomorrow's rate hike And so again, this is sort of where we are and it's really the great Question in terms of where the markets will go next there's been a lot of volatility in the bond markets You can see that we had a very big move up yesterday in rates rising 14 basis points today falling 18 basis points the Fed doesn't want this type of volatility in interest rates It's not really healthy for any market, you know up seven basis points and down not ten basis points in the ten year Then up 15 basis points down 15 basis points the next day and so this type of volatility is not really what the Fed desires and it's really gonna have to message To the market again what its intentions are you can see that, you know Again, if we look at the S&P, here's the you know, here's the 80 day cycle We've been talking about it's been working very well for many many months now well over a year it's currently in jeopardy of No longer working at this point based on this we should have seen a high already And you know, you can argue whether or not that's been made to me This looks just like a giant consolidation phase again If this is going to be a point in time where you're going to see the market move lower It needs to happen soon because otherwise you can say that this 80 day cycle is completely over And there are other reasons why we may think and continue to believe that the S&P 500 is sort of trapped up here We still know the call wall is still around 4,200 That's going to keep the S&P 500 contained and probably not really moving up significantly higher Unless we see that call wall shifting higher from an option standpoint Additionally from an implied volatility standpoint We've seen the spread between the spot VIX and the three-month future contract VIX declined to a low of Around seven just on April 28th, and you can see now we rallied back to around negative five Typically when this spread gets below negative five particularly when it gets towards negative six to negative seven It typically coincides with a peak in the S&P 500 So again from that standpoint if we've seen the low for the VIX for this current 80-day cycle Then there's reason to believe that if implied volatility starts moving up on the front of the curve There's a chance that you could continue to see the VIX begin to move higher And the S&P 500 begin to move down. Here's the NDX. You can see we closed the gap here 13,245 was the high from was the gap it on August 19th You can see we got briefly above it came back down and now we're moving lower again today So again this level here 13, you know This this is the resistance level around 13 to 40 or so very important Obviously as we've been talking about the NASDAQ takes this level out closes above it stays above it for a day or two You know your next likely area comes 13,750 which would be the August 16th highs again, if you break down below This 12,800 region gonna be a very bad sign for the NASDAQ basically the recent breakout that took so much energy To get this index to break out has failed and that's going to signal Lower prices are coming in again the trend in the RSI continues to point to momentum fading and momentum leaving the NASDAQ 100 when you look at the Dow got up to around third got up to 34,300 call it got up there This is a big resistance zone so far we failed so far we came back down You could see it appears we're forming some sort of broadening wedge pattern This is again a key level here for the third for the Dow Jones 34,150