Markets finished down for the month of May (but not by much).

Day-to-day swings remain high. Inflation remains high. Unemployment remains low. Sentiment remains… well, it depends on who you ask. But in general, people will suggest things are broken right now.

What is unknown is how this resolves itself. Here’s a likely preview though: 5 years from now, everything is higher – including stocks.

It’s not a high-risk prediction. Given the Fed (or, for that matter, central banks across the globe) has all but assure the markets it will intervene in massive ways if it believes it must, it’s difficult to find a scenario where inflation isn’t engineered into this thing. The question is, how much?

The question equity markets continue to grapple with is, how much more potential downside is out there?

While we don’t know, the scenarios continue to be interesting. Last week’s move was encouraging from a technical perspective. The direction really did shift toward stabilization. However, there is still plenty of unknown to contend with.

For now, the bias looks positive in the futures markets. The upside resistance area for the SPX is around 4200. Support is weak at 4070. If that were to fail, 4000 is next. Then things start to unwind quickly… new lows in this cycle are still very much a possibility. General trust in this market is pretty low right now. And the VIX remains relatively low (suggesting options makers are pricing in continued expectations for more downside from here).


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