From the June low at 7,232 to the all-time high at 7,648, through the regime shift, the AI capex reckoning, and now this. August will decide whether the recovery holds or hands back more of the year’s gains. The levels will be here first.
Thursday’s PCE data came in cooler than expected for June — inflation advancing at a slower pace than the previous month. Q2 GDP came in softer than expected. On their own, both are constructive. But the combination of slower growth and still-elevated prices is an awkward cocktail. The market liked the PCE print. The bond market is less convinced — the 30-year yield is still sitting near 5.24%, the highest level since 2007, and September rate hike probability has now moved to 63%, up from 35% a week ago. The Fed held, the bond market didn’t.
Month-end rebalancing is also a factor today. July was volatile — semis dropped roughly 25% from their late-June peak, oil crossed $100 and fell back, the S&P had its worst two-week stretch in months before recovering. Institutional rebalancing flows on the last trading day of July can move price in ways that don’t reflect genuine directional conviction. Don’t read too much into any single candle today.
The no-trade zone is inside 7,470–7,520 until the cluster resolves. Fading at the top of the zone is the risk-defined trade if it shows rejection. Buying a clean close above it is the confirmation trade. Neither is forced today given month-end noise.
Bull scenario
Path to 7,600.25
AMZN/MSFT template dominates the AI narrative. Cluster area (7,470–7,520) closes above on volume. 30Y yields stabilise below 5.2%. September hike fear fades. Semis bottom after 25% correction and provide sector leadership.
Bear scenario
7,370 → 7,300
META/AAPL template spreads to August earnings. 30Y keeps climbing. September hike becomes consensus. August seasonal weakness compounds. Third rejection of cluster area triggers systematic selling.