Key Tactical Takeaways:
> There simply has been no letup in our proprietary EA Risk Barometer's recent indications that its measure of risk appetite is at the highest possible level. This is confirmed by the recent acceleration of Relative Rotation towards risk sector leadership and risk aversion sector lag. ...is a CRITICAL line in the sand for SPX.
> The VVIX (VIX of the VIX) and VIX both jumped on Wednesday, but remain below their bearish short-term stops. Therefore, < 1-sigma price action should probably be expected until a VIX close above the short-term stop at ... increases the potential for > 1-sigma daily S&P 500 moves.
> Energy sector weakness is intensifying and will...
> We took profits on our ... short and went long ... with a target of 128.50 on Wednesday. We are looking to go long ...
Some Quick Thoughts:
In recent days, we've highlighted that fact that the S&P 500’s response to ... is going to yield critical clues as to the direction of prices over the next two weeks or so. Well, with the Fed's balance sheet starting to tick higher again and market participants now speculating that the Fed’s Powell will take a stand toward average inflation targeting (i.e., letting the economy run hot) in his Economic Policy Symposium speech on today, the cap-weighted S&P 500 ... Wednesday.
Combine the recent phenomenon of retail investors lobbing long call orders at grossly overvalued stocks like there's no tomorrow with unprecedented monetary bolstering of investor confidence and you get a concoction that feeds herd behavior. Oh, and let's not forget that the current administration also stands at the ready to talk this market up in the event it slips heading into the election.
Bottom line: ...
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