So traders have more concerns than the bombs exploding in Iran and Israel\u2026<\/p>\n
Bond prices fell on Friday \u2013 which is unusual when there should otherwise be a \u201cflight to safety.\u201d Bonds are slightly lower this morning, so rates are slightly higher.<\/p>\n
Rising long term interest rates are a bigger threat to investors than escalating Middle East conflicts. And, with the FOMC meeting this week, that threat might become more noticeable.<\/p>\n
TLT \u2013 the Treasury bond ETF \u2013 has been making a series of lower highs and lower lows.<\/p>\n\n\n It could easily make a quick break to the downside. And, the post FOMC announcement could provide a catalyst for that move.<\/p>\n That will be a strong headwind for the stock market \u2013 especially the banks and financial stocks.<\/p>\n We\u2019ll find out tomorrow\u2026<\/p>\n The typical pre-FOMC action is for the market to fall on Friday and Monday, then rally on Tuesday and Wednesday morning.<\/p>\n The risk of buying the S&P in its current condition is far greater than the potential reward. So, even though the market has recovered from Friday\u2019s decline, it doesn\u2019t change the setup we were looking at last Thursday, or Wednesday, or Tuesday…<\/p>\n In fact, yesterday\u2019s action might ultimately prove even more detrimental as it reinforces the \u201cbuy the dip\u201d mentality on even the slightest of dips.<\/p>\n Here again, I\u2019m reminded of the market\u2019s behavior in mid-February\u2026<\/p>\n After trading up to the 6050 resistance level, the S&P has been marking time for the past few hours. Stocks are off their highs. The VIX is off its low.<\/p>\n Everyone is waiting.<\/p>\n We\u2019re likely going to stay in \u201cwait\u201d mode until tomorrow afternoon \u2013 after the FOMC meeting.<\/p>\n Traders should focus on playing defense here. Volatility is too low given the potential risks. So, hang onto your cash.<\/p>\n Granted, as traders we all want to be active. But, when most stocks and sectors are stretched to the upside, and there is zero momentum on any downside moves, it is usually best to take a seat on the sidelines and wait for a clearer picture.<\/p>\n If you\u2019re looking to bet on the downside, I\u2019d suggest targeting the banks.<\/p>\n Best regards and good trading,<\/p>\n Jeff Clark P.S.<\/strong> If I\u2019m wrong and the market breaks out to the upside here, I don\u2019t think we\u2019ll miss much. The various moving averages are too far extended from each other to provide much fuel for a sustained rally.<\/p>\n Remember, there\u2019s nothing wrong with sitting in cash. We want money on hand to pounce at the best setups, which are sure to show up.<\/p>\n![\"\"](\"https:\/\/jeffclarktrader.com\/market-minute\/wp-content\/uploads\/2025\/06\/Screenshot-2025-06-16-135332-1024x534.png\")
<\/figure>\n\n\nThat Led to the \u201cFlash Crash\u201d\u2026<\/h2>\n
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Editor, Market Minute<\/em><\/p>\n