Trade Log — TECS Short | June 10, 2026

Position: Long TECS (3x Inverse Technology ETF)

Entry: June 10, 2026 Thesis: Technology momentum exhaustion, negative gamma regime, deteriorating macro backdrop.

I entered a short position in the technology sector today via TECS, the 3x inverse technology ETF. The setup had been building for several days, and this morning's CPI print was the final confirmation I needed.

The technical picture had been flashing warning signs. QQQ's PVI — a composite momentum indicator that aggregates RSI readings across multiple lookback periods — had pushed above 66, its highest level in five years, while money flow was signaling diminishing buying conviction.

In addition, QQQ crossed below its 200-hour moving average yesterday for the first time since the March low. With the gamma flip estimated near $710 (yellow), dealer hedging amplifies moves to the downside rather than dampening them. The $700 call wall (Red) sat directly overhead as resistance, and with max pain near $690 (not shown), the gravitational pull was clearly downward.

The Macro Backdrop: Rate Policy Turns Hawkish

This morning's CPI report did nothing to reassure the market. Headline inflation printed at a three-year high, while core came in at a tame 0.2% month-over-month — a split reading that left the Fed with no clean path in either direction. Allianz Chief Economic Adviser Mohamed El-Erian put it succinctly on CNBC: "Neither hikes nor cuts are on the table." He described the situation as a contained headline and energy shock not yet spilling into broader inflation — but cautioned that AI-driven capital expenditure is becoming an inflationary force on the demand side that the Fed will eventually have to reckon with.

The CME FedWatch tool reflects a more hawkish outlook. The market is pricing in a 72% probability of a rate hike by year-end — a significant shift from earlier in the year when a 2026 rate cut was the consensus expectation. A neutral to hawkish outlook is not a comfortable place for a momentum-driven, rate-sensitive index trading at elevated valuations.

The index deteriorated through the afternoon. By the time $700 broke, the short thesis was playing out in real time. The Nasdaq finished down 1.98%, the S&P down 1.62%, and the semiconductor index extended its losses to more than 12% since June 3rd. The rotation out of tech was broad and visible across the session. The macro tailwind that drove the rally from the March lows is fading.

Oracle Confirms the Cracks in AI Spending

The day's final piece came after the close. Oracle beat both top and bottom line expectations — record revenue, record operating cash flow of $32 billion — and still sold off 11% in after-hours trading. QQQ slipped a further 0.83% to $687.90.

Why? The headline numbers masked deeply concerning underlying economics. Free cash flow for fiscal year 2026 came in at negative $23.7 billion — Oracle spent every dollar it earned and then some on AI datacenter buildout. To fund it, the company raised $43 billion in debt and $5 billion in equity during the year, and plans to raise another $40 billion in fiscal 2027, including a $20 billion at-the-market equity issuance. That is not a self-funding growth engine.

The jump in Remaining Performance Obligations to $638 billion looked spectacular on the surface, but was driven largely by prepaid GPU contracts — customers either prepaying Oracle for GPU purchases or supplying the hardware themselves. This is a lower-quality backlog, not the type of recurring software revenue that markets pay a premium for. Meanwhile core SaaS grew only 10%, far below peers, confirming that Oracle's growth story increasingly rests on capital-intensive infrastructure rather than compounding software economics.

Broadcom last week, Oracle today. The market is starting to ask harder questions about whether the AI infrastructure cycle can sustain its pace — and whether the companies funding it can sustain their balance sheets.

Tomorrow: PPI and Adobe — More Potential Headwinds

Selling pressure is likely to persist at the open unless the PPI report, due before the bell, surprises meaningfully to the downside. Given that April PPI ran at +6.0% year-over-year with energy up 22.7%, and today's CPI showed headline inflation still hot, the market is braced for another elevated report. PPI is notoriously hard to forecast — driven by volatile commodities and energy inputs that move faster than models can track. A second consecutive large upside surprise pushes yields higher, pressures growth stocks, and strengthens the dollar. A softer print could spark a morning bounce, though with Oracle's post-market reaction still hanging over sentiment, any rally faces a tough backdrop.

Adobe reports after the close tomorrow and carries its own risks. The stock is down more than 40% over the past year and the bear case is compelling: generative AI is commoditizing the creative workflows Adobe built its moat on. Text-to-image and video models — Flux, Kling, Runway, Veo — let users produce finished creative work without touching an Adobe app. Adobe's answer has been to integrate 30-plus third-party models into Firefly, but the market isn't rewarding that strategy. What's more, Q1 net new ARR of $400 million already missed the $460 million estimate, and management guided Q2 operating margins down from 47.4% to 44.5%. A second consecutive quarter of decelerating net new ARR tomorrow would add fuel to the downside. (Ref: Bears of Wall Street via Seeking Alpha: https://seekingalpha.com/article/4910300-adobe-the-next-kodak)

Levels to Watch

On the upside, resistance sits at max pain near $690 and more significantly at the $700 call wall — that level needs to be reclaimed and held to change the short-term picture. On the downside, the $660 put wall (322K open interest, the largest put concentration) is structural support — market makers will need to buy QQQ to hedge as the index approaches it. Notably, $670 is approximately 10% off the recent high. That is the lower target for this trade.

The Bigger Picture

This pullback could be a healthy reset after an overextended rally. The underlying fundamentals are worth keeping in mind before turning outright bearish. According to FactSet's Q1 2026 Earnings Insight, the S&P 500 is reporting its highest earnings growth since 2021. The Magnificent 7 delivered 63.2% earnings growth — the best since Q2 2021 — while the other 493 S&P 500 companies reported 17.4% growth, also the best since Q4 2021. All seven beat EPS estimates, exceeding expectations by an aggregate 32.5%. Earnings are strong, and full-year 2026 EPS estimates for both groups have been revised upward. (Ref: FactSet Earnings Insight: https://insight.factset.com/earnings-insight-infographic-q1-2026-by-the-numbers).

So while the "sell in May and go away" crowd has the upper hand right now, that could flip quickly. I am not convinced this is the start of an extended bear market. What I am convinced of is that the near-term risk/reward favors the short side.