Thoughts on Markets: A LOT of speculative froth in Commodities now. The risk of a sharp unwind is rapidly increasing... For instance, Call buying in SLV near the highest ever – priors led to sharp drawdowns. Potential major topping candles in progress for Gold + Silver today, pending close. Even Energy Stocks (which I've been quietly bullish and Long all year) looking toppish despite Oil trading well. US Stock Indexes in general remain in a confirmed downtrend since last week. This week's failed bounces only increases the downside risks in my view. Meanwhile, still think Bond Yields or the Dollar aren't done going higher. The weak have been getting weaker for some time now (Rate-sensitives, Low-quality, and Negative-earning Stocks). Now if the few markets still going up (Commodities) join the selling, the probability of a broad Volatility spike rises significantly as everything gets unwound simultaneously. And the liquidity backdrop remains extremely poor – so this selling dynamic could be in play for several weeks / a few months. Watch how they close today... Will share some charts over the weekend. Good luck out there
@MacroCharts Thanks @MacroCharts. Always insightful. Happy weekend.
Well if you noticed dealer gamma was negative most of the week, $AAPL ivol went from 44 to ZERO, yes 0.00. NVDA broke trend and made a lower high. SPX made a lower high, IWM is back to bearish trade and trend, USD is climbing, bond market took care of the interest rates and raised them for the Fed. Clearly global macro is entering Quad 2, despite US equities being Quad 4 for April. So, what are we seeing? Higher for longer is what we're seeing. 60/40s caught on the wrong side perhaps, or too dogmatic. Interest rate sensitive equities are getting hammered further and the pace is likely to only increase. Those who understand that the only thing relevant right now is the persistence of inflation, have begun getting long of inflation, not worrying about what's frothy or what's in a bubble.
@MacroCharts how are you determining liquidity backdrop? cash on the sidelines ain't exactly low.