I will be brief. Beta is underperforming since April 20. Energy stocks have begun to underperform since then as well even though oil continues to chug higher. Overall the market looks weak. The sell off since since 4/20 low has been massively slow and choppy. The transports look awful. We should Gap down tomorrow, however, it is Opex week and I can’t believe the dealers want a repeat of August last year when they lost control.
The bottom line is that government bonds seem to be signaling recession while credit issuance has been very strong of late and spreads remain relatively calm. The market is unlikely to gather steam on the downside unless credit begins to deteriorate again. The European banks have troubling looking charts. There is a chance that equity could lead credit lower as we begin to see a serious selloff.
This is a treacherous market. Stay nimble. Ultimately we should see weakness and then a likely QE4 stick save. I don’t think the TPTB let this market go below 1600.If you enjoy the content at iBankCoin, please follow us on Twitter