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Boom Goes the Dynamite! - Morning Market Squeeze

Key Tactical Takeaways:

> S&P futures are higher again this morning, after testing and rallying up off of former near-term up-channel resistance in the wake of Chair Powell's speech on Thursday. If SPX can maintain a weekly close above ..., it would be viewed as a technical development that could ...


> As cyclicals have seen a tactical peak relative to the S&P, the overall sector rotation picture still shows strong favorability towards ...


> While the VIX is on the rise, the move remains ... in nature. In order for the S&P 500 to develop larger than 1-sigma daily ranges with any regularity, we'll need to see the VIX close above ...


> Treasuries are bid this morning, after Thursday's sell-off took the 10-Yr yield to the first big check point at 0.75%. Larger post-flag potential to ... will go uncontested against a trailing ST Noise Buffer at ....


> We cleaned up the trade ideas sheet on Thursday. Although the bear spread aspect worked, we took a small loss on our outright ... short. We also took profits on our SNAP short and SKWS long. In addition, we added ..., with an initial target of $25.40.

Some Quick Thoughts:

"Boom goes the dynamite!" In the wake of one of the most significant revamps to Fed policy since 2012, longer-dated yields surged to their highest closing levels since mid June on Thursday. As we previously highlighted as being the speculation heading to the virtual Jackson Hole symposium, the Chair Powell announced the Fed's intensions to average out their inflation target over the long-term (i.e., in periods where inflation is consistently < 2%, the Fed will structure monetary policy to aim right above the 2% bogey). That's all well and good, but if you’re targeting > 2% inflation when you've only been able to achieve > 2% just a few times since 2012 (the average since 2012 is 1.4%), how in the world are you going to sustain > 2% inflation using current inflation

metrics? The Fed's actions could have meaningful implications for...


Even with the Fed Chair addressing the organization's "significant concern" regarding the persistent undershoot of 2%...


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