Key Tactical Takeaways:
> Although the US$ (DXY) is making a series of higher lows above critical support at ..., it needs to close > ... to reach fresh bullish escape velocity.
> Risk averse sectors like staples and are starting to show improvement and should be watched closely for signs of more aggressive money rotation in their favor.
> After our EA Risk Barometer issued a ... signal on Tuesday, the VIX is right at a critical upside escape trigger of ... as of this writing. If there is a close > this level, a follow-through VIX rally would likely occur.
> HYG slipped below 1st support on Tuesday, and should be watched as it is about to test critical support at ....
> We reentered a long position in ... on Tuesday.
Some Quick Thoughts:
"May you live in interesting times." Perhaps there is no more fitting expression than this at the current moment. Specifically, the "Robinhhood Mafia," the same crowd that has been bidding garbage companies to enormous valuations and ganging up on heavily shorted stocks to the point of trampling Wall Street's brightest, just might spark the next correction that crashes their party.
As hedge funds are likely looking to shrink some of their VaR, we must be on a close lookout for evidence of a negative feedback loop in the form of a long squeeze. Technically, a negative feedback loop won't have any real traction until we see 2 consecutive lower hourly closes < .... Until this occurs, though, the market's prevailing trend stays higher.
Despite hopes for a strong recovery, disappointing economic data of late likely means Fed Chair Jerome Powell will .... His press conference will start at 2:30 pm. There is no update to FOMC forecasts today.
The Shanghai Comp. and Nikkei both closed higher overnight (+0.11% and +0.31%, respectively), while HANG SENG fell -0.75%, The DAX is down -1.82 and is about to test CRITICAL support at 13460.
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