‘The Buy Signal Is Close To An End’
Is the rebound in risk assets sustainable?
That question burns after the Dow rallied into an ostensible bull market this week following Jerome Powell's Brookings address.
That session's gains pushed the S&P to within 15% of record highs, no small feat considering all that's happened this year. The simple figure (below) suggests the stock drawdown is now fairly pedestrian.
Of course, that's not the whole story. Not even close. When you consider the year stocks had alongside a historic dr
Expecting resurgence of dollar strength next week, this move has been too fast. Silver in particular looks like a great short opportunity right now and I opened up a significant position on Friday.
@Acer
Interesting. I will have to take a look at silver.
It seems everything is pretty much one trade.
Either it’s risk on or it’s risk off.
I’ve been early (e.g. wrong) so far.
So much bullishness right now. They are frothing at the mouth.
Technically we have hit some resistance lines. The pattern is complete. It would make sense to have a pullback here.
But making sense is not what this market does.
SPX 4200 or 4300 is not impossible.
I think, once earnings start coming in soft, this market is going to correct downward, and probably pretty hard. We’ll have some big, negative, overnight sessions. But until they actually see it in the numbers, it could rally further.
The bear trade, which I think is the right trade, is not so easy.
Anything relating to housing is probably going to have a very tough year.
DHI looks overbought.
How does a VIX below 20 make sense in this context? Can fixed income and other institutional participants really tamp VOL to this degree? And who would take the other side of that trade?
Miranda,
I recommend searching for some featured articles by Harley Bassmann on this site. One is called “finding treasures in convexity” (or similar), the other one details options dealers positioning. Both contain answers to your question regarding the other side of the trade and its ramifications. For good measure throw in some of the articles containing Charlie McElligott in the headline and you will be enlightened. At least I was.