TRADE SETUP

Where do we stand fundamentally?

U.S. stock futures, including those tied to the S&P 500, fell after Israel launched airstrikes on Iran, raising fears of escalation. S&P 500 futures dropped roughly 0.9% in premarket trading, reflecting a risk-off sentiment. Energy prices surged, with Brent and WTI crude futures up over 8%, while safe-haven assets like gold and the dollar rallied. Some analysts suggest the market reaction may be tempered due to Iran's limited military response capacity.

The May Producer Price Index (PPI) rose 0.1%, cooler than the expected 0.2%, lifting investor sentiment and easing bond yields. This followed a week where softer inflation reports and a solid Treasury sale fueled optimism about Federal Reserve rate cuts if the economy slows.

The SPY is being rejected by the upside resistance at 610 and is turning lower for a possible revisit of the 586 level.

For the rally to continue, we need a sustained breakout above 610. I am inclined towards a short-term short trade entry, as the overall market sentiment remains fragile due to geopolitical risks and the potential for inflation to rise again with the increase in oil prices. A break below 586 is opening a test of the next support 527.

_{I am taking a near-term short-trade entry with an SL above 610 to target 531. You can buy put options as well. If the trade is stopped, reverse it to a long trade entry.}