Is the crisis over? There was a bit of a scare early on but soon after Harris chose Walz as her VP markets took off. Maybe it’s a coincidence but we did see markets soar following the news of Walz on the VP ticket. Now we have a rally and at the same time waiting for war in the Middle East to bust out. Typically, when you get a panic in the VIX like we just did, the crisis does not resolve a day or two. It usually takes weeks to several months to get through the fear.
Market breadth is at 73%; but in the larger scheme of things this bounce (NASDAQ +360) is small. I will tell you what I mean via my High Beta index returns the past few days:
Even after today’s bounce, we are still down ~13% since 7/29, clearly not out of raw weeds yet. Today’s 4.5% lift in the $SMH is nice, but we are still down 10% for the index this month.
Enjoy the rally but keep vigilant.
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There is likely a big player in the throws of death we don’t know about yet. That event will have casualties, even if it was just a whole bunch of worry over nothing. More likely some entity was flushing and found the limits of liquidity were shallower than hoped.