Summary

• The S&P 500 has rallied nearly 4% off its 50DMA, but I expect this rally to fade post-Fed meeting, with a deeper correction of 8% quite likely.
• The latest rally is triggered by oil declining to its lowest levels since the U.S. Iran conflict broke out, although we are not out of the woods yet.
• AI and semiconductor trades are driving recent gains, but a historic flood of equity supply from IPOs and lockup expiries could trigger further volatility in 2026.
• New Fed chair Kevin Warsh’s preference for a less transparent communication style may also unsettle markets that are used to Powell’s forward guidance.
• I plan to deploy 8% of my capital into high-conviction AI names if the S&P 500 corrects to its 100–200DMA, favoring a moderate pullback scenario if oil breaks below its 200DMA.
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Introduction & Investment Thesis

Last week, the S&P 500 (SPY) found support close to its 50 DMA (day moving average) and has staged a close to 4% rally since then, despite the May inflation print

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