Good morning, traders.
Let me be blunt: This rally looks a little too good to be true.
Stocks ripping higher. Talking heads acting like we’re off to the races again.
Even CPI numbers coming in cooler than expected, with monthly inflation ticking in at just 0.2%.
That’s the kind of headline that lights a fire under bulls.
But before you get carried away, let me stop you right there.
When the market screams higher in a short window like this, especially after a stretch of fear and volatility, you don’t chase.
You slow down.
You ask what’s really changed.
Let’s take a closer look.
The Fed vs. Trump — Again
We’ve still got a messy standoff playing out between President Trump and Fed Chair Jerome Powell.
That’s not just background noise. That’s front and center.
Powell’s been way behind the curve.
He was late to hike rates during the COVID-19 inflation surge, and he’s dragging his feet once again.
We’ve got a CPI print that shows inflation might be stabilizing …
But don’t forget how late he was before.
The market might be feeling good about the cooler inflation read, but that doesn’t mean we’re out of the woods.
Not even close.
China Trade Deal Still Murky
Then you’ve got this vague optimism floating around about the U.S. tariff “deal” with China.
But have you seen the fine print? Me neither.
That’s because there isn’t any — at least nothing that gives investors real clarity.
Tariffs, tech access, and supply chain snarls are still lingering in the background, and nobody’s addressing them head-on.
So, while some traders are treating the market like a piñata full of upside surprises, I’m telling my students to treat this with serious caution.
Volatility’s Too Quiet
VIX has been grinding lower, which on the surface sounds bullish.
But if you’ve traded as long as I have, you know the VIX doesn’t stay quiet forever.
When it gets this low, it doesn’t take much to wake the beast.
Personally? I’m bullish on volatility returning in the weeks ahead.
If you’ve got long-term holdings, this is the perfect time to think about tail risk hedging.
That means grabbing a little insurance, maybe some VIX calls one or two months out.
It’s not glamorous, but when the rug gets pulled (and it often does), those hedges can be a lifesaver.
Keep Things in Perspective
Don’t get caught up in the hype.
Cool CPI prints and a melt-up in stocks don’t erase the real risks still out there: central bank friction, geopolitical uncertainty, and a market that’s arguably gotten way ahead of itself.
If you’ve made some gains, great.
Protect them.
If you’re feeling FOMO, take a breath.
There’s always another setup.
And if you’re a serious trader, remember: When it looks easy, that’s when you need to be most careful.
To proceeding with caution,
— Jeff Zananiri
Markets are moving fast.
Aaron Hunziker will lay out how to navigate it all Friday at 10 a.m. ET. Hear about how to trade it, what to watch, and what comes next.
👉 Grab your spot before it fills up.
*Past performance does not indicate future results.
