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Bear Squeeze In Late Innings, Watching 5Y, 5Y Forwards

Key Tactical Takeaways:


> While stimulus has now been put on hold just as the Presidential seasonal cycle officially peaked on Wednesday, the bullish ST Noise Buffer is intact. Pending its breach, squeeze potential to SPX ... is on the table.


> While fatigued short-term momentum has helped keep a lid on yields in the past 48 hours, the 10-Yr yield maintains short-term trend support for continued movement to higher rates, against the first trailing stop of ....


> Two of the biggest winners on the Trade Ideas page, ... & ... have surpassed their initial targets. While profit taking is certainly warranted, we're going to let profits run against their respective ST stops listed on page 3.


Some Quick Thoughts:


If you were to ask us what we believe is this report's most important tool, the ST Noise Buffers have to be in contention. During periods like this, when defensive sector rotation, elevated VIX levels, and bearish headlines accompany bearish price action such as Tuesday's "bearish engulfing" session by the S&P 500, the inability of bears to force a close below this volatility-based stop helps keep us on the right side of the market. After Wednesday's 1-month high close by the S&P, this stop is now at ...


Regular readers of this report can attest that ever since our EA Risk Barometer model triggered a Level 2 sell signal just prior to the 09/02 high, it has been our view that the post-September correction would play out within healthy corrective limits. Although the S&P closed at  a 1-month high on Wednesday after rallying from a healthy drawdown of < 10% at the September lows, our base-case remains that there are ... Instead, as we noted earlier this week, we simply think that ... In the end, though, we reiterate that our base case suggests that such a move, should it continue to unfold above the bullish ST Noise Buffer, would only mark the ...


One key part of the higher risk asset rotation narrative of late, the ongoing rise in inflation expectations, is moving to the top of our watch list. Why? Because it can be argued that the wave structure of 5-Yr, 5-Yr Forward Inflation Expectations is looking ... As we will highlight in this weekend's Weekend Macro Press, the S&P 500 has been highly correlated to this indicator this year. Therefore, if our observation is correct and this indicator is nearing a ..., it would lend credence to the idea that the equity market is nearing t....


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