It's 'all about the flow,' most traders will say; and they're right. This time of year that's essentially a trickle of new liquidity, relatively speaking, although of course not when you get into a month-end short-covering late-day scramble.

This 'flow' may run out-of-steam early in the new week; retreat; try again and then have risk for a bit. Interestingly for the S&P Friday was an outside-up or key reversal day (in a favorable way); opposite of the outside-down reversal a couple weeks ago we didn't have much faith in. Neither do we in this reversal.

All of this about 'flow' probably changes the closer we get to June Quarterly Expiration (3rd Friday in June) and of course first we could see some action surrounding Apple's WWDC; but that depends of what Apple does with AI, or whether they revolutionize Siri again (hints now suggest they've got a plan).

Personally I've been critical of taking the risk to pile more code on-top of Siri; given risks to a multitude of glitches that might occur, but that's Apple's choice if they think the aging early-stage voice-ai can handle the burden. Yes, Siri is a form of 'voice generative Ai', but that makes it interesting as to whether newly rumored 'assistive function' controls embedded within Siri is complimentary or competitive to (for-instance) what SoundHound offers. (We don't know how it all works; but several cars now have both Siri via CarPlay and SoundHound working the same vehicles. It is also the case that SoundHound's embedded in new Nvidia drives, and also Qualcomm Snapdragon processors, which will be in next iPhones too..plus we'll see what's in Apple's own (Arms) chip.

Friday, PCE was not much of a factor; we did get the 'dead-cat' (sorry felines) rally early in the day with expected selling on the presumed good news; then S&P stabilized while DJIA moved up while Nasdaq was still on the defense, and Oil down too. Everyone realized key economic segments didn't slow their pace of higher prices measurably; just enough to give the lower PCE 'cover'. I noted the month-end activity (recovery) later; and it temporarily zoomed up.. I say temporarily because it's month-end activity with no particular foundation.

Again we question whether you'll get much more; continue to view this as a 'mish-mash' of a stock market, which continues oscillating (range) at or near historically high levels that theoretically should not be sustainable. Air-pockets in mega-caps have reinforced views we've shared about the increased risk in the handful of overpriced leaders. Let's see how they do as we get into June.

Initially expect fairly common early June strength tries; because of 'technical' supply tending to end with May's end. But it doesn't mean an early June rally couldn't be just a reprieve, or brief hiatus of volatility, before pressure resumes into mid-month; and then firmer ahead of June Quarterly Expiration. Variable.

If that's confusing; it's because it's sort of a confounding market. Even major hedge funds are struggling this year, and often chasing what already moved, or nursing losses from chasing those big stocks. Yes small stocks were tough too; but if you sold some last year and bought back near lows earlier this year, in some cases you should be either ahead a bit, or more or less flat. Smaller stocks 'with' viable business models and revenue expectations are in-theory a better risk vs. chasing the big stocks pulling back, but still seriously stretched.

Market X-ray: month-end activity is basically .. crazy; underlying inflation is not particularly softer, when you examine the sectors (and the Chicago PMI plus the Dallas Fed the other day); although not enough to dissuade the Fed from staying on basic message; a cut later in the year. Sooner if they panic.

The trouble with this is the ongoing 'stagflation' as I've called it (though many dispute my idea about this) in a bifurcated society, not just economy. But we'd anticipated defensive action in May resuming in June's first half; no change. It may be that S&P catches a further bid Monday; but then sell-off before some sort of intraweek try. Not significantly higher here I'd think, as it dawns on the majority that AI is promising; but not so highly revenue producing (the slimmer orders for some gear sustains that, as yet). Our focus remains in 'Application Software' that can actually generate contracts and revenue; but it's all slower.

The general trend is rangebound, despite a sweeping month-end Friday rally which may reflect the 'month-end' supply exhaustion and short-covering that I spoke to in the last hour's video. In any event none of this is conclusive as yet but there are numerous variable that go beyond textbook seasonal models.

Big-tech remains the weakest sector in a very mixed Friday Index market. In a sense there's been lots of 'churn' and deterioration in those 'non-magnificent', or mega-caps, that so many pundits were cheer-leading literally after run-ups.

The broadening-out evaporated quickly where it showed up in May; air-pocket sell-offs in the big-caps 'took no prisoners', and were pretty brutal. No bids for a slew of stocks that money managers 'presumed' would be easy in-and-out. I tried to warn about that concentration in a small universe; but it persisted and it remains... positioning is stretched.. despite Friday's partial comeback (more impressive in the S&P than in the individual participants). 'Stretched' includes managers who thought they could do well holding the mega-caps and writing Call options on them for income. Well that 'sort of' worked for them; certainly not called away; but the hedge funds doing that now have stocks that often dropped significantly more than premiums received from writing the options.

So they likely merely hold in a direct way, because mostly managers will think rebound potential greater than what they can get from options. For now that's possibly right; but if S&P does drop to 47-4800 after this 'upside burst' into the very end of May / start of June, it will look good for managers merely 'briefly'.

Checking the 'macro', you can sense 'hopes' for the Fed to ease fairly soon at the same time nothing much has changed. Earnings are mediocre for some; a trending near expectations for many; and overblown for several mega-caps as they essentially go through rotational corrections of their own.

Again let's not get carried away with upside or downside in early June; as the 'end-month' supply issue helped S&P recovery drama Friday afternoon; plus might run shorts in a bit early next week (in alternating fashion) before some effort to retest this past week's lows. We would not emphasize the downside for the Index however; given prospects in the later part of June; particularly going into Quarterly Expiration in 3 weeks. June can be up-down; up later on.

Bottom-line: liquidity is limited for now; but opens up a bit in June... and gets more interesting as we approach June Expiration (a Quarterly), by which time ideally any correction will be done, and S&P ready to rebound again. Early to say that, but a general roadmap ahead of the new month in volatile churning.

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