Hi YXI friends,

Risk sentiment remains very positive after the FOMC, with Bitcoin now challenging the $100k hurdle overnight.

A quick summary on last night’s FOMC:

The economy is in a great shape. Economic growth is robust excluding net exports. Unemployment rate remains low. Inflation is moving towards target. The risks of higher unemployment and inflation have risen, but not yet materialised.

The Fed is in absolute no rush to cut rates in this backdrop as the economic picture is more benign than in 2019. The Fed only focuses on the hard data (Nonfarm, CPI, PCE), and is not ready to preemptively act on soft data (e.g. consumer sentiment).

(This is my own decoding) While the market worries that the Fed is late yet again, the Fed is comfortable to cut in large sizes (e.g. 50bp or 75bp chunks) if the downside risks abruptly materialise.

Therefore, nothing to worry about. For now.

Thank you Powell.

For those looking for our machine learning Model Signals directly, you can find them in our dedicated morning note on QQQ, BTC, TSLA (free), AAPL, AMZN and TLT. We also show them in the main content below.

Let’s dive in!

Table of Contents

• 1. YXI Daily Dashboard

  • Observations from today

  • SPY and QQQ Charts

  • YXI QQQ Model Signal

• 2. TLT

• 3. Bitcoin (BTC)

• 4. Magnificent 7 Stocks

  • Apple

  • Amazon

  • Alphabet

  • Meta

  • Microsoft

  • Nvidia

  • Tesla

• 5. Trade Updates & Monitoring

• 6. Notable ETF Flows From Previous Day

DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

1. YXI Daily Dashboard

Observations from today

1. Powell clearly signalled that the Fed is not rushing to cut. This is hawkish on the margin and supportive of yields higher

2. Apple tanked Alphabet yesterday by exploring AI options in Safari Search. This could be the beginning of the end of Alphabet’s Search dominance.

3. Bitcoin is charging higher on improved risk sentiment.

SPY and QQQ Charts

I am putting some more charts that precede the main SPY and QQQ charts here. The idea is that over time, we learn what macro drivers are actually moving stocks, rather than just guessing the impact of news sentiment (“Tariff On, Tariff Off!”).

SPY vs DXY (https://www.tradingview.com/x/qxyLMlJR/)

Currently, SPY and US Dollars are moving in sync. A stronger US Dollar doesn’t just incorporate higher US yield expectations, but also the USD demand from international capital market flows. Greater inflows are supportive of higher USD and higher equity prices.

SPY (https://www.tradingview.com/x/vHNpcH5F/)

SPY moved within the same tight range of the past 5 days, but appears to be ready to challenge the 200 EMA today.

It is risk-on across board for risk assets. I am optimistic SPY can make it over the 200 EMA soon.

QQQ (https://www.tradingview.com/x/EzEMbiQQ/)

QQQ appears in a take-off mood here, with a lot of accumulation completed at $470-$485.

Our wave (iii) target is $526+. Of course, QQQ needs to reliably close above the 200 EMA first.

FOMC Projections

We use the Fed Funds futures market to understand the market expectations of future FOMC interest rate decisions.

Fed Funds Futures Yields are marginally higher after the FOMC. Investors continue to price away the chance of a June cut.

The primary expectation is for a July cut, but to me even that may not happen unless unemployment shoots up in the next 2 months.

3-month SOFR Futures Yields

YXI QQQ Model Signal

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