Equity markets are still on amber alert
Equity markets are still on amber alert 🧵
Several warnings flashed before Friday's selloff:
1/ Positioning:
Put/Call ratio + hedge fund/systematic exposure showed the marginal buyer was already long.
That excess positioning hasn’t been flushed yet (equities, not crypto).
The relief rally on Monday was almost euphoric clear sign the pain trade is still lower.
Image
2/ Breadth Divergence:
% of stocks above their 20-day MA fell sharply while $S&P 500(.SPX)$ made new highs.
Image
3/ The dollar:
DXY breaking out with a volatility expansion — a classic “risk-off” tell (esp with crowded positioning)
Image
4/ Volatility
$Cboe Volatility Index(VIX)$ coiling → volatility expansion firing long.
Image
5/ VIX Behaviour:
During the last two weeks saw 5 consecutive SPX up / VIX up days...for the first time ever.
"Something's going on here"
And a VIX ~17 was kinda high for an all-time-high market
6/ Risk-On/Risk-Off Divergence:
My proprietary RoRo gauge flipped from risk-on to neutral last week - not ideal when SPX is “melting up.”
Bonds rallied on Friday, indicating the markets' view of headline risk as a growth shock rather than an inflation shock. A growth shock would not be ideal given current equity valuations.
I'm not outright bearish here. But the market likely stays choppy and volatile until it breaks last Friday's range.
Welcome to the return of headline risk & trade war tape bombs!
Image
For whom haven't open CBA can know more from below:
🏦 Open a CBA today and enjoy privileges of up to SGD 20,000 in trading limit with 0 commission. Trade SG, HK, US stocks as well as ETFs unlimitedly!
Find out more here：
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
