The market is reacting positively this morning after Retail Sales came in slightly weaker than expected.
Now, you might be wondering — why would weaker numbers be a good thing?
Simple: It’s another sign that the economy is slowing down, which increases the odds that the Fed could start cutting interest rates sooner rather than later.
Less spending means less potential for inflation… and that’s exactly what the market wants to see.
But that’s not the only thing happening today…
There’s another market dynamic in play: contract rollover.
Rolling and Climbing: How Contract Rollover Impacts Markets
Futures contracts don’t last forever — every quarter, traders transition from one contract to the next. Right now, we’re rolling from the March 2025 contract (H25) to the June 2025 contract (M25).
And here’s why that matters:
- The June contract (M25) opened 52 points higher than the March contract (H25).
- If the market pushes the H25 contract up to the open price of the M25 contract, the M25 contract will move even higher.
- That creates a situation called “rolling and climbing.”
In simple terms, traders are adjusting positions to the new contract, and if momentum keeps building, we could see a strong push higher across the board.
What’s Next?
Between positive retail sales reaction and contract rollover dynamics, we’ve got a market that’s trying to find direction.
If momentum holds, we could see stocks push higher as traders fully transition to the new contract.
But if resistance kicks in, we’ll have to see whether this rally has legs — or if it’s just an adjustment phase before the next move lower.
In the meantime…
Stay sharp,
—Geof Smith
P.S. Jack Carter is calling this controversial asset the best income opportunity he’s seen in years!
