Today's U.S. Stock Market Summary: Front-Running Bulls, Vanishing Selling Pressure, U.S. Stocks Close Out June

Pension selling pressure was absorbed early, but the market logic remains unchanged

Goldman Sachs and Morgan Stanley have been warning for days that there would be $30 billion in concentrated pension selling pressure on June 29-30. But on Tuesday, the market rose instead of falling. In short, bullish funds front-ran the market, consuming part of July's rally in advance, and the positions of pensions and bears actually became fuel for this wave of gains. However, this does not mean there will be no rally in July. Passive funds and mechanical allocators like CTA quant will still add positions to stocks according to rules in the second half of the year; the buying that should come will not disappear because of front-running.

Chip stocks performed well, but the breadth of the market was mediocre

The S&P 500 rose 0.78% on the day, but only slightly more than 40% of its components actually closed higher. The rally was almost entirely driven by a few chip stocks like Intel, MRVL, and AMD. The Philadelphia Semiconductor Index has surged 94% year-to-date, while the S&P has only risen by single digits. The strong get stronger, and funds are still willing to chase chip stocks at reasonable prices.

From a sector perspective, a clear rotation can be seen: defensive sectors like real estate, consumer staples, utilities, and financials, which had just seen inflows in the past few weeks, have been drained again over the past two days, with funds flowing back into tech and industrials. Apple, Google, Tesla and other heavyweight stocks also strengthened in tandem on the day.

S&P closes at 7498

The S&P 500 ultimately closed at 7498 points, just a stone's throw away from the key round number of 7500. Based on intraday options data, the 7500 strike price attracted significant net buying from the morning onward. Combined with the presence of positive gamma exposure, this price level effectively acted as a "magnet," pulling prices higher. On the daily chart, the market has successfully broken through the gap between the 50-day moving average and the 10- and 20-day moving averages, showing clear bullish momentum. However, it is still constrained by a descending trendline extending from the 7600 high, with resistance around 7520. In the short term, there are both support and resistance from options structures. Tomorrow's call wall is at 7540, and the put wall is at 7475.

Technically, bulls are in firm control

A pullback for QQQ to 727-730 is a good entry point, and for SPY to 740-742

After its recent rebound, the Nasdaq has fully filled the previous gap and established itself above key moving average resistance levels. The former resistance has now turned into support, which is a bullish signal. From the gamma exposure structure, after passing the 750 level, gamma exposure begins to weaken noticeably, with 740 being a relatively concentrated gamma area. If a healthy short-term pullback occurs, the 730 area will provide solid support. A pullback to the 727-730 range can be considered for buying on dips.

AMD surged 7.7% in a single day, hitting a new all-time high (INTC also performed well)

AMD closed at $580.82 on the day, surging 7.7%, breaking through the consolidation range of $500-$525 seen in previous weeks and setting a new record high. From options positioning, the 600 level is currently the area with the largest positive gamma exposure and trading volume, and is the most immediate short-term target. Further out, bullish options positions have even accumulated at the 700 and 800 levels. Overall, the upward trend of the AI infrastructure supply chain remains very solid. Every pullback to key moving averages like the EMA 20 attracts aggressive buying, and there are currently no signs of deterioration. It is expected that after breaking through 600, the stock will likely consolidate at high levels for 1-2 weeks, allowing moving averages to catch up before resuming the uptrend.

Morgan Stanley lowers oil price forecast

Morgan Stanley noted that shipping through the Strait of Hormuz has recovered faster than expected, coupled with ample domestic supply in the U.S. and weak overseas demand, the market is facing the risk of oversupply. As a result, it slashed its Brent crude oil forecast for the third quarter of 2026 by $15 to $75 per barrel. Lower oil prices in the medium to long term are a disinflationary factor and are generally positive for the overall stock market.

Market valuation is still not expensive, but positioning has become somewhat crowded

Taking large, mid, and small caps together, the overall market is currently undervalued by about 8.1%. Even though the S&P is only about 3% away from its all-time high, supported by sustained earnings growth, the fundamentals remain attractive, and from a long-term perspective, it's still a good buying opportunity. Once the S&P breaks 7530, the next target is 7600, followed by 7700. If the Nasdaq 100 can reclaim and hold above 30,500, it is likely to open a new round of upward space with a target of 32,000. In terms of positioning sentiment, Goldman Sachs' indicator has officially entered the extremely crowded red zone. However, historically, once this state forms, it tends to last for several months. Therefore, any short-term pullback triggered by technical or sentiment factors will likely be quickly absorbed by bulls.

Earnings growth is the strongest foundation for this rally

The S&P 500's earnings growth rate for the first quarter of 2026 reached 27%. Even excluding one-time gains from Amazon, Google, and Nvidia due to external investments (e.g., investments in OpenAI, Anthropic), the normalized growth rate still stood at 17%, far exceeding the market's original expectation of 13%. The earnings forecast for the next quarter is also 22%. This is why even if a short-term technical pullback occurs, it is difficult to develop into a true systemic collapse.

JPMorgan's new quarterly collar structure is clearly more aggressive

The collar options set for the third quarter (expiring September 30) are: sell call at 7890, buy put protection at 7090, and sell put at 5990. Compared to last quarter's 6865/6180/5210, all three strike prices have moved significantly higher. The sell call raised to 7890 suggests that institutions do not believe the market will peak quickly in the third quarter, but rather that the risk-reward of chasing further after 7900 diminishes; the buy protection set at 7090, roughly 10% below the current level, appears more like locking in gains already made this year rather than fearing an imminent bear market; the sell put also raised to 5990 indicates that institutions have a larger overall risk budget than last quarter. Placing protection about 10% below is quite consistent with the current market environment. The factors that could truly trigger a pullback at this point include disappointing earnings, rising interest rates again, slowing AI capex, quarterly rebalancing, and CTA deleveraging—these typically correspond to technical corrections of 8% to 12%. A 10% drop from 7800 would only bring it to 7000 points. The market has already had one 10% correction this year; any further correction is unlikely to exceed 10%, and if it does, it will probably occur in August, September, or October. Historically, JPM's collar structure more reflects quarterly gamma dynamics, conveying that the next quarter will likely be a choppy upward grind rather than an immediate bearish turn. Overall, it can be interpreted as bullish but with greater emphasis on risk control, which is notably looser than last quarter's stance.

July 1 marks the start of the second half of the year

A wave of mechanical concentrated buying from global mutual funds, new 401K contributions, and ETF passive allocations for the new quarter will flow in. The market will likely continue higher along this inertia. The only short-term variable is tomorrow's speech by new Fed Chair Kevin Warsh at the ECB forum, but given the upcoming Independence Day long weekend, the market generally believes he is unlikely to deliver especially hawkish remarks at this juncture. The VIX fell 6.8% on the day. The intraday trend was completely suppressed by bears. If it continues to converge downward, it could signal a continuation of the summer short squeeze in U.S. stocks.

What's the outlook going forward?

July will see an initial surge, while August-September requires caution for high-level volatility (though there will still be many opportunities in individual stock earnings, and sectors will continue to rotate during the volatility).

The judgment is that driven by passive fund inflows at the start of the new fiscal year, the market will likely push higher early in the month, with the S&P having a chance to break through the previous high of 7600 and even challenge 7800. However, after entering the traditional slow season of July-September, the rally may gradually lose momentum and turn into repeated high-level consolidation. The overall approach remains not to short easily, treating pullbacks as opportunities to buy on dips. Sell high and buy low; the high could be as high as the 7890 given by JPMorgan, and the low could be the 7090 put protection they provide. These two levels are not guaranteed to be reached, and everything depends on market conditions.