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If you’re still dreaming about rate cuts this summer, it’s time to wake up. 

Let’s just cut to it—oil ripped off its lows by 30%. That alone should be setting off alarm bells for anyone still hanging their hopes on disinflation. Inflation doesn’t retreat while crude surges. We’re sitting above $68 a barrel—my line in the sand—and pushing higher. That’s not a rate-cutting environment, that’s a rate-defending one. The Fed’s not cutting while inflationary pressure is back in the picture. Period.

Now, what does that mean for traders? It’s like this: It means bonds are not the safe haven they were billed to be. We saw the 10-year note try to price in cuts with a move higher—then it completely reversed. Full bearish engulfing move, expansion candle, higher high, lower low. That’s your signal right there. “Not time to buy bonds.” I’ve said it before, and I’m saying it again.

And if you're still leaning on tech or small-caps? Stop. Those plays rely on lower borrowing costs. When that doesn’t happen—and we’re clearly not there—they suffer. The Russell (IWM) and Nasdaq (QQQ) both gave us classic gap-down-then-close-up candles. But net-net? Down. Every day. That’s not bullish, that’s instability in disguise.

So, where are we rotating? Into defense. I’ve been saying it for weeks, and now it’s playing out in real time. Consumer staples, healthcare, and utilities—they’ve all shown strength while growth sectors roll over. Look at CVS. Oversold, gave three clear buy signals, and it's seen an 8% recovery. You want setups like that when the economy shifts.

You’re not going to find those in industrials right now. That run has played out. We’re seeing the sentiment shift, the rotation out. The same goes for homebuilders. Without lower rates, they’re stuck. I called it back at $129—now we’re at around $82. That’s not a correction, that’s a reckoning.

Let’s talk credit cards. Don’t look at Visa. They don’t lend. You want the defaults? Look at Citi, Capital One, or AmEx. That’s where rising rates and a stretched consumer will show up. If you think those names are immune, think again. They’ll bleed as consumers stop spending and can’t repay. That’s why Visa and Mastercard are my canaries—if the transaction volume drops, it means the consumer’s tapped.

And when the consumer’s tapped? We go risk-off. That means you focus on yield, on stability, and on sectors people can’t live without. Electricity. Groceries. Medicine. Look at utilities like NextEra. Look at healthcare. Look at volume and price structure aligning across timeframes. That's the kind of setup we live for.

The path forward isn’t about aggressive bets on growth. It’s about defensive posturing and waiting for the right signals. This isn’t a market to chase. It’s one to navigate with precision. If you’re listening to the market, it’s already speaking loudly: be patient, rotate smartly, and above all—protect capital.

We’re not in expansion, we’re in transition. Trade accordingly.

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