June Drift

There are a few things that contribute to this seasonal price movement, where we may lack both volume and follow-through. This doesn’t mean we can’t trade, but we want to be aware of this seasonal pattern, especially after a few strong months to the upside.

Some of the factors behind the summer chop:

Quarterly options expiration (OpEx)

• Often referred to as triple witching, it is the date when stock options, stock index futures, and stock index options contracts expire on the same day.

• This occurs on the third Friday of March, June, September, and December.

• Dealers, market makers, and institutions managing large options exposure roll, close, or adjust their positions.

• This often creates sharp, short-term moves or fakeouts (whipsaws around key levels).

• It can either act as a magnet (pulling toward a level) or a slingshot (breaking free once expiration clears).

• Price sometimes drifts toward the level where the most options will expire worthless (max pain), but if it starts breaking key levels, volatility can increase because hedge adjustments need to be made quickly.

Mid-year rebalancing

• Long-term investors and funds managing large diversified portfolios adjust portfolios to reflect gains and reduce exposure.

• Institutional portfolios (like mutual funds) adjust asset allocations to stay in line with their targets.

• Typically happens around the end of June.

• If stocks have had a strong run, portfolios may sell some and reallocate to bonds or cash.

• Different than OpEx because it’s not tied to options or expirations, but instead it is a calendar-based reallocation, so the price action can be more subtle.

• More of a drift or flattening of leadership stocks.

Lack of earnings catalysts

• Earnings, and the reaction to them, is a key driver of movement.

• Without earnings-driven momentum, many stocks tend to chop or drift, especially if the broader market is in digestion mode.

• For much of June, few major companies are reporting and there’s no fresh catalyst from earnings updates.

• This can make follow-through harder to come by, especially in options trades that rely on speed and momentum.

This period doesn’t require sitting everything out, but definitely calls for more precision. You want to trade clean setups, stay light when things aren’t moving, and save your energy for the names when they are actually setting up. No need to force trades just to stay busy, the second half of the year will bring plenty of opportunity. A little patience can go a long way.

SPX Outlook

This past week, SPX pulled back from its recent higher high of 6059.40 and came down to retest the 10EMA, which also lines up with the previous high from May 19. This area, around 5963, shows up a few times when we zoom out. It is a level that acted as support and resistance during the November through February chop, and it was retested right before the March decline.

We're sitting in a zone with multiple touch points, where price has stalled, bounced, and broken down before. Friday’s candle tapped that line and closed slightly above it, which makes this coming week more of a wait-and-see.

• The 10EMA is starting to flatten, no longer as strong as it was earlier this month. That can be an early signal that momentum is slowing, and it lines up with the small pullback we just had.

• This could go either way. If we hold the 10EMA and start to push higher again, we may be forming a higher low.

• If we lose it, the next possible support is the 20EMA around 5927, followed by the 5840 to 5800 area, where the 200SMA and a horizontal support level converge.

• There’s no clear directional signal yet. The pullback has been controlled, and we’re still above major moving averages but…

• The 1h is still trending down and there has been no rush of buying.

The index would need to get back over the 10EMA and start to move away from it to show that buyers stepping back in. A break below the 20EMA could confirm a roll over and a shift attention to the next levels lower. This would then require a period of rebasing before going back long.

So now we wait.

RDDT Recap – Still Early, But Constructive

I’ve had some regrets about highlighting Reddit as my stock of the month because it hasn’t really proven itself yet. Structurally, there’s been a drift up from the April low, and now the 10EMA, 20EMA, and 50SMA are stacked in the right order on the daily. But price is still trading below the daily 200SMA, which I treat as a filter when lining up weekly setups. It doesn’t mean I won’t take the trade, but when we’re still under the 200, we’re usually in a transition phase, not a full uptrend, and that can mean more chop or stalling, especially without momentum. Anyways, what I see overall and for the coming week:

• The daily chart shows structure is improving. Price has held the 10EMA, 20EMA, and 50SMA on each dip, and the EMAs are now in the right order, a constructive sign that the base is firming up.

• We also just cleared the 50SMA on the weekly chart. It’s a step in the right direction, not confirmation of a trend, but another piece of evidence that the stock is trying to turn the corner.

• The daily 200SMA is still above. Until price clears it and starts building, we are not in a confirmed stage 2 uptrend. It’s still a transition, the early stages of a potential move, not the middle of one.

• The 122–125 zone remains key. It’s capped multiple advances over the last couple months, and we stalled just under it again. A clean breakout through that area, especially with some volume or a tight reentry setup, would shift things for me.

If Reddit can break through 125 and start holding above it, that would shift the structure and open the door for follow-through. If it doesn't, it may just need more time. And if it starts to drift back down, I’d take it off my radar for now. There’s always another name that’s ready.

From the summer chop to the quieter earnings season to the index digestion, stay patient. Some names may still set up and they could even be leading a directional break, but be super selective and keep your risk tight. The best trading is when the market is in agreement, when everything is either flying high or selling off together. That kind of alignment makes it easier to catch and hold moves, even if you too are just trading the swings of the daily time frame.