Is This the Market Blowoff Top?

Unexpected trading activity hints at big changes ahead.

Today's trading was a rollercoaster.

We've seen low volume in the past few weeks, but today, the S&P 500 futures saw a surge with 2 million contracts traded. This is unusual just before a long 3-day weekend kicking off summer.

Bulls were ready to celebrate, with Nvidia leading the charge. Its breakout to new lifetime highs on blockbuster earnings was supposed to be the highlight.

But things took a sharp turn. As soon as the bell rang, sellers stepped in, leading to a dramatic 100-point reversal.

It wasn't just stocks that got hit; bonds, metals, and crypto also took a beating. The only safe havens were the dollar and Nvidia.

So, what caused the sell-off? The focus on Nvidia made everyone overlook the Fed Minutes released earlier. The Fed is adopting a more hawkish tone, indicating that rates will stay high for longer. This wasn't discussed much by the talking heads this morning.

Right now, Wall Street is playing chicken with the Fed. Latecomers to the party might get spanked by the market.

If Nvidia hadn't been up 10% today, the market would have been hammered even harder.

Economic data related to the consumer remains grim. Target missed earnings for the fourth straight quarter due to reduced spending. If you're a bull, you're going into this holiday feeling nervous.

If rates hold steady, especially the 10-year rate at 4.5%, stocks can't maintain these levels.

They will have to go lower, and the Fed might have no choice but to keep rates high to control inflation.

This might be the start of a significant shift.

Good trading, and remember – rent's due.

Josh Belanger