A Market More Focused on Earnings Than the Fed
On a Federal Reserve decision day, you might expect markets to sit on edge waiting for any hint of monetary policy shift. Yet the options market is telling a different story. Looking at zero-DTE S&P 500 options, today's implied volatility is barely elevated relative to tomorrow's, suggesting traders are largely overlooking the Fed entirely. With Fed funds futures pricing a 100% probability of no policy change, the central bank's announcement has become a non-event in pricing terms.
The real focus has shifted to earnings — and specifically to AI guidance. The actual numbers from the largest tech names matter far less than what management teams say about future AI capital expenditure. If even one major hyperscaler signals a meaningful pullback in AI spending, the implications for the broader market would be significant. That guidance, more than any Fed commentary, is what could move equities meaningfully in the near term. Of course, Powell's prepared remarks may pass without incident, but the Q&A portion always carries the risk of an unexpected curveball, and given how low volatility is priced today, that creates a potential trading opportunity in itself.
Questions about Powell's future as Fed governor will likely remain unresolved today and may need to wait for clarification in subsequent communications.
UnitedHealth: A Bearish Setup at Resistance
UnitedHealth's chart over the past year — and even going back three years — can be described as a "gap-filled wonderland." Beyond the expected earnings gaps, the action is choppy and discontinuous throughout. After a recent explosive move higher, the stock is now bumping up against meaningful overhead resistance near the 380 level, and the technical picture suggests the rally is running out of fuel.
The Technical Picture
The most striking feature of the chart is the prevalence of gaps. The post-earnings close near 347 lines up with one such gap, while the 377 level represents another gap that capped subsequent highs — making it the key resistance to monitor. To the downside, gaps near 325 and a more notable one around 295 mark potential targets if the stock rolls over.
The 5-day exponential moving average sits near 359, while the 251-day yearly moving average rests at 342, which could provide meaningful support if the near-term trend cracks. The RSI continues to make new relative highs alongside price, which technically argues for further bullishness — but a slip below the 70 overbought threshold would signal a meaningful shift. Volume profile analysis shows trading activity thinning above 370, with no clear nodes again until the 280–315 range.
The Trade Construction
A short-dated put spread captures this bearish thesis with defined risk. Buying the May 22nd 365 puts and selling the 355 puts creates a $10-wide put spread for a $3.80 debit. With shares around 367, the long puts are already slightly in the money, positioning the trade to benefit immediately if the rally fades from current levels.
Emerging Markets ETF: Anticipating a Gamma Squeeze
The bullish case for the emerging markets ETF rests on two pillars. First, a weakening US dollar tends to be highly favorable for emerging market equities — they thrive in a soft-dollar environment. Second, and more pressing right now, the technical structure looks primed for a breakout. With the ETF trading around 63 and the 64 level acting as a key trigger, a breach above that zone could ignite what's known as a gamma squeeze.
The mechanics are straightforward: retail traders increasingly hunt for assets on the verge of breakout. Once a trigger level is crossed, retail call buying accelerates, forcing options market makers to hedge by purchasing the underlying, which in turn drives prices higher in a self-reinforcing loop. This pattern has played out repeatedly in recent sessions across various names, and the EM ETF has sufficiently active options order flow to make this dynamic plausible here.
The Technical Setup
The 6350 level is particularly meaningful — it marked the prior high before an anomalous spike, and price topped out near it again recently. The ETF's composition (heavy exposure to China, Taiwan, South Korea, India, and Brazil, with sector weights skewed toward tech, financials, and consumer discretionary) provides a useful diversification angle to areas under-represented in domestic equity portfolios. Year-to-date the ETF is up approximately 14%.
The 5-day EMA sits near 63, while the 21-day monthly EMA at 6150 marks a downside reference point. RSI hovering around 60 maintains a bullish trajectory, and a coordinated breakout in both price and RSI above their respective trend lines would confirm momentum. Volume profile shows activity thinning out dramatically above 63.50, with downside support tiers at 62, 60–61, and 57–59.
The Trade Construction
A "standoff" approach to capturing a potential gamma squeeze with limited risk is to buy the May 15th 64 calls and sell the 66 calls — a $2-wide spread done for a 65-cent debit, putting just $65 of risk per contract on the line. The short-dated expiration is intentional, as a gamma squeeze plays out quickly and demands options that move rapidly. This structure lets a trader sit back and let the squeeze develop rather than chasing alongside retail.
GE Aerospace: A Make-or-Break Level
GE Aerospace presents a different kind of opportunity — a bearish setup tied to a critical technical level. The stock is testing the 280 zone, which has produced reactionary lows recently but now appears to be a genuine make-or-break threshold. A breakdown below 280 would likely open up significant downside, and the technicals reinforce this interpretation.
The Technical Picture
The 280 and 270 levels are both flagged by the chart structure: 280 marks an old high, a subsequent low, and a chop zone, while 270 has produced a double bottom. There's also a gap to the upside at 290 where price stalled in recent sessions. A downward-sloping trend line has gotten progressively steeper, adding to the bearish momentum.
What makes 280 especially significant is the confluence with the 251-day EMA at the same level — the longer the moving average, the more meaningful the breach if it occurs. The RSI is forming a triangular pattern and is close to breaking through its own trend line, which would offer confirmation alongside any price breakdown. There's a volume node between 266 and 276 that could provide brief consolidation if price slips through 280, with 250 marking the next significant area of interest below that. To the upside, the stock was rejected at the largest volume node spanning 290 to 310, with the point of control near 299 — a level the bulls would need to recapture to invalidate the bearish setup.
The Trade Construction
This trade extends further out in time to allow the breakdown thesis to develop. Going to the July 17th expiration, buying the 270 puts and selling the 260 puts creates an out-of-the-money put spread for roughly a $3.50 debit. With the stock trading around 281.68 — only about $9 above the trigger zone — the breakdown could be imminent, but the longer-dated structure provides ample time for the move to unfold.
Synthesizing the Three Setups
What ties these three trades together is a willingness to position on either side of the market based purely on what each individual chart is saying. UnitedHealth shows a stock running out of gas at resistance after a steep climb. The emerging markets ETF presents a coiled spring at a key breakout level with favorable macro tailwinds. GE Aerospace sits on a critical support level whose breach would unlock substantial downside.
Each trade uses a defined-risk options spread, which is a sensible choice given the relatively low volatility environment and the binary nature of the technical levels involved. The defined-risk structures cap downside exposure while still allowing meaningful participation in the directional thesis, and the varied expirations — from 15 days out to roughly two and a half months — match each trade's expected timeframe rather than forcing all positions into a single window.
In a market where the macro backdrop is largely on hold and the next major catalyst is corporate guidance on AI spending, isolating individual technical setups with defined-risk options structures may be a more productive approach than taking large directional bets on the broader index.