US equities entered June at record highs, with the S&P 500 around 7,580 and the Nasdaq posting its best month of the year, up more than 8% in May. A 60-day US–Iran ceasefire memorandum has eased geopolitical pressure, while oil fell nearly 17% over the month, reinforcing risk appetite. Technically, the S&P has advanced from early-April lows within an ascending channel and is currently tracking the midline, implying further scope towards the upper boundary if the trend remains intact. Momentum is cooling: RSI is at 70.54 and has begun to roll over, pointing to a potential pause unless fresh demand emerges.

Support levels are clearly defined. An anchored VWAP rising from the April low sits as the first dynamic floor, with horizontal support near 7,350 beneath it after acting as a cap and then a base through mid-May. The market now faces a dense US data slate, including ADP private payrolls and ISM Services on Wednesday, jobless claims on Thursday and US Nonfarm Payrolls on Friday, a key test for Fed policy expectations. Separately, Berkshire Hathaway has made a $6.8bn all-cash offer for Taylor Morrison, marking Greg Abel’s first large M&A move as CEO and boosting homebuilders pre-market.

Channel Momentum and Tactical Positioning

We are riding a strong uptrend into June, but the cooling momentum suggests we should not get complacent. While the S&P 500 has room to run within its current channel, the RSI failing to make new highs alongside price is a classic signal of exhaustion. This tells us to stay long but to keep our hands near the exit.

With the index mid-channel, we see a tactical opportunity for a push towards the upper boundary near 7,700. We can express this view by looking at short-dated call spreads to define our risk ahead of this week’s key data. Recent CBOE data shows the put-to-call ratio has fallen to a yearly low of 0.65, indicating high complacency that could fuel a further squeeze higher if payrolls data comes in soft.

However, we must also respect the warning signs and be prepared for a pullback if the data is hot. Buying cheap, out-of-the-money puts for Friday’s expiration could be a prudent hedge against a hawkish surprise from the Nonfarm Payrolls report. The support level at 7,350 is the critical line; a break there would signal the uptrend is in jeopardy.

Event-Driven Volatility and Sector Focus

This week’s jobs report is the main event, creating a classic setup for a volatility trade. The VIX is currently trading near 13, which is historically low heading into such a pivotal economic release that could shift Fed policy expectations. We believe a long straddle or strangle is an effective way to position for a larger-than-expected move in either direction post-announcement.

We are also paying close attention to the housing sector after the Berkshire Hathaway bid for Taylor Morrison. There has been a notable spike in call option volume on the homebuilders ETF (XHB), with open interest on July contracts jumping over 20% yesterday. This suggests a new, rate-sensitive leadership group could be emerging, and we should consider bullish positions there.

The immediate plan is to maintain our core long positions while using options to prepare for this week’s binary event. We will watch the rising anchored VWAP as the first dynamic support on any intraday weakness. Ultimately, Friday’s jobs number will likely determine whether we test the channel’s upper limits or re-evaluate the trend at 7,350.