Republic Risk: This Chart Shows How Rate Cuts Lead to Crashes

History books are the least used financial texts.

Equity Storm Watch Is RED on the S&P 500 and GREEN on the Russell 2000

Futures are up as traders, as the Personal Consumption Expenditure (PCE)—the Fed’s preferred measure of inflation—came in at 2.5%, in line with expectations. 

But the bigger news is the sizeable decline in S&P 500 momentum on Thursday. We had a very large head fake on Thursday, and my concern is that we’re about to witness increased volatility and the return of our Bull Trap patterns, which tend to come when institutions use any short-term pops to sell. That’s what happened on Thursday. 

Thursday’s market was a BIG head fake.

Nasdaq futures are charging higher, up by as much as 1% so far in premarket trading with Mag 7 names Nvidia and Apple leading the charge. But we are 2% under the 50-day moving average, and we really need to see a move back toward those levels (or completely oversold on RSI and MFI at the same time) to have confidence on this dip.