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One Trend Break Does Not A Top Make - Morning Market Squeeze

Key Tactical Takeaways:

> Despite the S&P's recent stabilization effort, ongoing smallcap weakness and rotation in favor of risk averse sectors suggest that ...


>  Although the VIX closed below the 27.10 stop on Friday, the degree of the violation was rather trivial, leaving the 09/03 breakout area of 26.60 intact. Therefore, it's too soon to say that < 1-sigma daily ranges are about to become the norm.


> As risk-off flows continue to benefit Treasuries, the benchmark 10-Yr yield is at risk of ...


Some Quick Thoughts:

When I tell you that I have spent the past several years fighting tooth and nail to avoid having to use social media outlets like Twitter, this is probably an understatement. Unfortunately, I have since been forced into this arena as a means to promote this new venture of mine. In skimming through some of the posts this weekend, a reoccurring theme has been that many seem to think that just because the S&P has violated a trend line means we're about to see a downturn to rival the post-COVID swoon from earlier this year.  Sure this market may feel quite bubbly, but bubbles are often ...


One day prior to the start of the September correction, you'll recall that our EA Risk Barometer had registered a Level 2 sell signal, which generally precede healthy pullbacks of the -2.5% to -10% variety. So far, the S&P's max September 2020 drawdown is -6.97% (based on closing levels), putting us right in the sweet spot. Sure, S&P futures are higher this morning after Friday's cash trading failed to generate the panic selling that was possible with the intra-day breach of the 09/08 pivot low. At the same time, though, ...


Bottom line, one trend break does not a top make. Topping is usually a process, as opposed to an inverted V. With credit spreads ...


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