This wasn’t hard to forecast. We live in an era of bailouts. There wasn’t any tangible pressure on high yield or even junk. As a matter of fact, the LTSA index is at record highs. This does not mean the markets are great and will keep going up — but it does mean we are NOT on the verge of a systemic collapse due to Evergrande — who of course will be bailed out if needed.
I sold out of my leveraged ETF positions at the open and switched to mostly stocks, up 150bps with 55% cash. We have the FOMC talking at 2:30pm and they’ll be talking taper — so this can hurt markets if words are now to the liking of those with the levers.
Presently there is a lot of sideways movement after the initial burst higher. The Dow is +350, Nasdaq +100 and I suspect we will remain range-bound until Powell gets on the mic.
NOTE: We have been in an extremely oversold range in Stocklabs for a week and our Intelligence algos suggest higher prices lie ahead. This is not a holy grail — but data based upon our technical readings during previous tapes similar to this. Whether this plays out like before is up for debate.Twitter