2025.06.30 Weekly
Can’t dispute the PA
Some announcements to start …
Weekly note will be migrating from Medium to Ghost in July.
I have been keeping a trading journal on a cloud noting platform called evernote since early 2019, jotting down trade ideas and thoughts around major market developments, reviewing the macro landscape and cross-asset charts, all in an effort to get a sense of the ebbs and flows of the market in preparation for the week ahead; and since mid-2021, I started to openly share some of that work into a Weekly note of which this site has served that purpose well. But the reason for this migration ties in the with the next point.
We will be launching a paid Discord server.
I know I know, ‘paid’… I have enormous disdain for the grift in this industry but hear me out… As I have experienced first-hand, surrounding oneself with experienced and knowledgeable traders is extremely powerful, and I owe it to these daily interactions with colleagues (some of more than 8-years) for the trading career I have built, from quite literally, nothing. Juxtaposing that with enquiries we’ve received about a real-time service, we have decided to scale out our highly active and close-knit group into a Discord community of traders looking to boost their edge. Regular write-ups discussing core trading themes and ideas, commentary with snippets of institutional-level analysis, and a daily live stream at the European market open to discuss market developments and trading setups for the day ahead are all just a few of the features that will be part of this new community.
Moving on …
As my bearish stocks and bullish dollar leaning views have been well expressed in my prior Weeklies, I will be doing the usual chart medley this week in an effort to get an objective technical look at the market and how that tallies with those views. Let’s dive in.
MACRO DATA
Consumer confidence was expected to tick higher in June but came in lower across the board. Income expectations remain net positive which presumably says something about high inflation sentiment lingering among consumers.
Continued claims continued to make new cycle highs, though the decrease in initial claims suggests it will decelerate in the coming weeks.
The US still remains the most resilient though some major economies have seen slight improvements. Details of the US report puts a particular emphasis of inflation pressures rising, as well as notable Trade/Export challenges and negative impact of Tarrifs on costs and demand felt being a consistent theme across the Flash reports for June.
- USA — continued growth at slightly decelerated pace, employment accelerated while inflation pressures continued to rise sharply over recent months, quoting the S&P Economist: “Prices for goods have meanwhile jumped sharply again, the rate of increase accelerating to a three year high as firms pass higher tariff-related costs on to customers. Service providers are by no means immune to this tariff impact and likewise reported another jump in prices, often linked to tariffs on inputs such as food”.
- Euroarea — very marginal improvement at 50.2 composite adding to a series of low 50.0 prints seen through the first 6–months of the year (50.4 the average of the first 6-month’s readings). Successive monthly fall in manufacturing input costs contrasted with continued strong inflation in the service sector. Employment very marginally higher with Germany and France still in a slump but increased in the rest of the Eurozone. “The eurozone economy is struggling to gain momentum. For six months now, growth has been minimal, with activity in the service sector stagnating and manufacturing output rising only moderately”.
- UK — economy reamined in a sluggish state, business conditions have improved but activity growth remains “disappointingly lacklustre, indicative of second quarter GDP rising at only a 0.1% quarterly pace. Business confidence also remains in the doldrums compared to this time last year, losing ground again in June”. Employment continued to be cut but these conditions have led to a “marked cooling of inflation pressures”.’
- Japan — services see strong growth versus the manufacturing decline leading to the composite to rise to 51.4 from 50.2 in May. Perhaps the most encouraging highlight is services inflation continuing to weaken “at the slowest rate in 15 months” while employment rose at the “quickest pace fo nearly a year”.
Looking at the last 3-months of regional economic surprises, the trend of positive surprises rolling over remains intact. LATAM and EMs has been a very positive story in recent months and those continued to soften, the Eurozone consistent with the commentary in the latest PMI report is in better shape outside the powerhouse economies via the CEEMA index.
EQUITIES
I have been bullish at the April lows and was out fully capturing 5.5k points on the Nasdaq, but bearish the last 800pts or so which is what inspired today’s caption “Can’t dispute the PA (price action)”. As last week’s price action has shown, the bullish momentum is still proving very strong, but I still can’t shake a bearish leaning from here.
Global equities finished on an exceptionally strong note as reflected by the weekly bullish engulfing bars in ACWI and ACWX. US equities was main driver in the broad risk rally, Asia closely followed, while European equities not quite showing the same amount of ‘oomph’.
Large-cap Growth (particularly NVDA GOOGL and META) was the main driver of sentiment last week with some broadening out to SMid-caps.
SPX put in new ATH’s last week where I do get the sense that the rally has begun to overreach above the 6100 handle. All the large-cap indices (SPX, OEX, XLG) have printed a weekly DeMark sequential 9 count.
Semiconductors (SOXX, SMH), Communications and Telecom (XLC, XTL), and Basic materials particularly Oil and Metal Commodities (XLB, XOP, COPX, XME) are sub-sectors also showing the weekly 9 countup print.
Market breadth continued to improve last week particularly versus the 100dma, but there is a cautionary signal here with the % of stocks against the shorter moving averages diverging against the new highs in the index.
SPX has entered mean reversion territory relative to their 50 and 100 day averages. A glance at the 100dma series against previous market regimes suggests equities have tended to need monetary or fiscal impulses to drive it higher at this point. I would say that Trump’s tax cuts and deregulations should weaken the severity of a recession over the longer term and thus the bear-case also, but those positive tailwinds should largely be priced in and needs balancing against a stagflationary environment and softening household fundamentals. In other words, I don’t think it is as easy to argue for significantly higher upside at this point.
Skewdex made a huge turnaround last week dropping over 6 points and the put/call ratio plummeting from ~1.0 to 0.75.
A lot of ITM calls rolling off over the coming weeks with 6100/50 area likely to be well supported while a move above 6200 should see some acceleration; I would expect the latter move to be short-lived based on the above profile however. On the downside, losing the 6100 handle should see the recent sentiment neutralise.
COMMODITIES
Commodities sold off as geopol premiums were wiped off at the start of the week on talks about a ceasefire between Israel and Iran. No doubt this was the main contributor to risk sentiment finding a bullish boost.
Oil has not moved since selling off on the Iran ceasefire news hovering around the 50fib of the last low-to-high cycle. This 64/66 range has been an important pivot and I would probably expect it trade around this range without a new catalyst. As such, I think this is a decent range trading candidate on the shorter timeframes.
Gold sold off aggressively with the technical bias beginning to shift bearish closing at the lows of the April-June range and weekly stochastics veering below the 50 mid-line. It is a little short-term oversold but I would be looking to sell rallies this week as I’ve been doing last week also on the view that there is potential for a dollar rebound as well as much lesser geopolitical risk.
Copper is showing early signs of potential exhaustion at these levels. With tariff deadline looming in the week after, I think a natural few percent correction with a tight stop is a good tactical idea barring immediate deal announcements. This would also play into my view of USD rebound and a more stale risk picture at best over the coming months.
RATES
The US yield curve saw a period of bull steepening for the latter half of June with another soft inflation report and dovish chatter from Fed officials. Perhaps the most significant was Michelle Bowman, who has been the most hawkish in the committee, who said she would be open to a July cut IF inflation continued to print weak. Powell on the other hand said that IF we see inflation coming in higher or if the labor market were to remain strong, then we would probably be moving later, but despite those caveats to those comments, market reactions (hanging onto Bowman’s IF, and ignoring Powell’s) tells me that the focus is fully on sooner cuts rather than something later.
The SOFR market is now pricing in 65bps of cuts by the end of the year from about 45bps of cuts at the middle of June. I’m not so sure expectations can get much more dovish than this, particularly if this week’s claims and NFP holds up fine on Thursday. That would be a potentially big moment for US rates and dollar.
Looking at changes among some major economies, rates have moved further in Euro’s favour and a clear winner since mid-June.
FX
Bearish engulfing in USD and another strong week for the EUR benefitting from the move in rate spreads. GBP also maintains a strong bullish bias. My preference is EURUSD GBPUSD and USDJPY to express the pro-USD trade, and of those I would say USDJPY is the cleanest expression given that I see rates at or near dovish extremes, and seeing potential for inflation risks materialise in the hard data over the coming months which would be Yen negative. GBPUSD would probably be next down in my order of preferences due to a challenging outlook on longer-term fundamentals, and higher sensitivity to broader risk rally that could show cracks on newsflow not living up to the optimism.
Above session performance chart suggests there has been a lot of EUR GBP and CHF buying by Europe that has accelerated last week. I suspect much of that has to do with the month-end rebalancing flows. I like to see patterns break when I look at these so will be keeping an eye on how Euro Cable and Swissie performs over the coming weeks.
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That’s all for now. Good luck trading!
