This week’s market action was a rollercoaster—from Chinese tariff headlines to Moody’s surprise downgrade of U.S. debt. But the spotlight was firmly on UnitedHealth Group (UNH). With a $260B market cap, UNH has been under pressure, dropping nearly 60% over recent months due to a downgraded outlook, DOJ scrutiny, and a CEO shake-up.

Despite repeated calls to “buy the dip,” UNH kept falling. This is a textbook case of FOMO (Fear of Missing Out) clouding judgment. Without a clear process, traders risk chasing bottoms that keep moving lower. The lesson? Stick to your strategy.

📊 Week-to-Date Performance Snapshot

• S&P 500: +5.3%
• NASDAQ: +7.2%
• Gold: -3.6%
• U.S. 10-Year Yield: 4.48% (up 10 bps)

  

   

The rally was driven by a narrow group of names—semiconductors, FANG stocks, and high-beta tech. Nvidia surged on China tariff news and Middle East deals, while defensive sectors like healthcare, real estate, and utilities lagged.

🧠 Sector & Style Rotation

• Winners: Tech (XLY), Consumer Discretionary (Tesla, Amazon), High-Beta Stocks
• Losers: Healthcare, Utilities, Staples
• Strategy: Long high-beta, short low-beta = strong outperformance

💣 Moody’s Downgrade: Echoes of 2011?

Moody’s downgraded U.S. debt after Friday’s close, echoing the S&P downgrade of 2011. The U.S. now carries a 124% debt-to-GDP ratio and a 5–7% deficit, raising serious questions about long-term fiscal sustainability.

Expect volatility early next week, especially in bonds and the U.S. dollar. The downgrade could shift sentiment away from U.S. assets in favor of global diversification.

🔮 Fed Watch & Volatility Trends

• Rate Cuts: Market now pricing in just 2 cuts in 2025, starting around October

  

   

• VIX: Crushed post-OPEX; short-term vol at 14%, 30-day at 17.2%
• S&P Weekly Straddle: Implied move of just ±1.3%—volatility compression in full effect

📉 Technicals & Trade Setups

• S&P 500: Rallied from 5500 to 5975, breaking through 5830 resistance
• NASDAQ: Similar pattern, outperforming slightly
• Gold: Down ~10% from highs; weaker demand from China and ETFs
• DAX (Germany): New all-time highs—bullish breakout

🛍️ M&A Watch: Retail Revival?

• Foot Locker acquired by Dick’s Sporting Goods at an 85% premium
• Chart mirrors UNH—massive drawdown before the pop
• Reminder: FOMO trades often ignore the pain that preceded the gain

🗓️ What’s Ahead: Key Events to Watch

• Chinese Retail Sales & Industrial Production (Sunday night)
• JPMorgan Analyst Day – Jamie Dimon speaks
• Nvidia at Computex – Ahead of May 28 earnings
• Flash PMIs (Thursday)
• VIX Expiry (Wednesday) – Potential market inflection point
• G7 Meetings & Ukraine Talks – Geopolitical backdrop

  

   

💬 Final Thoughts

We’re in a familiar regime: high-beta, short-squeeze, tech-led rallies. Until the market signals a shift—via sector rotation or macro surprises—stay with the trend. But be cautious. The downgrade, compressed volatility, and overbought conditions suggest a potential turning point.

Community and Mentoring

• Join Our Community: Our Discord community offers both free and advanced channels for in-depth discussions: https://discord.com/invite/Yf42SgAx7f

  Access to 30 channels for just $74.99 per month. https://buy.stripe.com/5kA3dmdVV1g4cuIaEE

• For personalized mentoring, reach out soon as slots are filling up quickly.

Have a good Trading Week!

For any questions or to join our mentoring sessions, email us at

Greg📩 Contact: greg@duponttrading.com